Influence of Financial Literacy on Small and Mediumsized Enterprises‘ Access to Finance: A Case Study of Awutu Senya East Municipality, Ghana.

Abstract

Financial literacy has been recognized as a crucial skill set essential for the establishment, management, and prosperity of small and medium-sized enterprises. Its importance in aiding entrepreneurs to make prudent financial decisions, particularly in securing external funding for business growth, has gained prominence. This study sought to explore the influence of financial literacy on Small and Medium-sized Enterprises' access to finance in Awutu Senya East Municipality. A sample of 333 participants were selected for the study utilizing a stratified selection method. Questionnaires were employed in collecting data. The study employed multiple regression and independentsamples t-test for the data analysis via the Statistical Package for Social Sciences Version 22. The study found that financial literacy indicators such as financial negotiation skills, budgeting skills and debt management skills positively influence access to finance. This suggests that financial literacy is crucial to the ability of small and medium-sized enterprises to acquire financing. Finally, the result shows that degree of financial literacy of male owners is greater than that of female owners of small and medium-sized enterprises. This demonstrates a significant gender gap still exists in financial literacy, particularly among owners of small and medium-sized enterprises in Awutu Senya East Municipality. It was recommended that owners should enroll in financial literacy programs offered by entrepreneurial skill development groups to gain the knowledge and expertise they need to make informed financial decisions. Special emphasis should be place on financial negotiation skill, budgeting skills and debt management skills if the access to finance by small and medium-sized enterprises is to be improved significantly