The Role of Financial Performance in Mediating Social Capital Relations and Business Sustainability in Village Credit Institutions

Village Credit Institutions (VCIs) in Badung Regency play a crucial role in the local economy. However, the relationship between social capital and business sustainability has not been widely researched, especially in the context of financial performance as a mediating variable. This study aims to analyze the role of financial performance in mediating the relationship between social capital and business sustainability in VCI Badung Regency. This study uses a cross-sectional survey approach, with a sample of 113 VCI chairpersons in Denpasar. Data analysis was carried out using SmartPLS 4.0. The study's results indicate that social capital has a positive impact on business sustainability. Additionally, financial performance has a positive impact on business sustainability. Financial performance acted as a partial mediating variable, suggesting that all hypotheses in this study were significant. This research confirms the importance of social capital and financial performance in supporting the sustainability of VCI's business. These findings contribute to the development of the literature on business sustainability and managerial practices in microfinance institutions. This research offers new insights into the relationship between social capital, financial performance, and business sustainability, highlighting the significance of financial performance as a mediator in the context of VCI.