Abstract

This study examines the mediating effect of financial literacy on the relationship between financial inclusion and SMEs’ performance. Using a targeted sampling technique, we selected SMEs that have been in operation for 5 years and are duly registered with SMEDAN. Meanwhile, a simple random sample was used to select 250 SME operators or managers for the study. Data were analyzed using structural equation modeling (SEM). The results show that financial inclusion is positively and significantly associated with SME performance. There is also evidence that financial inclusion is directly related to financial literacy. Furthermore, the results show that financial literacy has a large positive impact on the performance of SMEs. Financial literacy has also been found to partially mediate financial inclusion and SME performance. The study then recommends that small business regulators work with accounting professional organizations to organize financial literacy workshops, seminars, and short courses for small business owners. This goes a long way in making funding more accessible for small business operators.

Full Text
Published version (Free)

Talk to us

Join us for a 30 min session where you can share your feedback and ask us any queries you have

Schedule a call