Financial Literacy And Performance Of Small And Medium-Size Enterprises In The Accra Metropolitan Area Of Ghana

Abstract

The clarion call for the need to equip small and medium-sized enterprise (SME) with appreciable financial know-how amidst the continuous fall of such enterprises in emerging markets shows that financial literacy is a primary factor capable of influencing performance. The study sought to establish how financial knowledge, financial awareness, and financial attitudes, affect performance of SMEs in an emerging market. The quantitative study was promised on the positivist paradigm and executed under the descriptive design. The study population comprised 780 SMEs operating at the Accra Metropolitan Area of Ghana. A simple random sampling technique was adopted to sample 258 SMEs operating in the study area using a structured questionnaire. However, a survey conducted using 61 selected SMEs at the Adenta Municipal Area as a measure to assess instrument reliability and validity. Software such as IBM SPSS Version 21, SmartPLS4 (newest version), and Microsoft Excel were used to analyze the quantitative data using both descriptive statistical analysis (frequencies and percentages) and inferential statistical analysis with a focus on PLS-SEM. The study found a significant positive relationship between financial knowledge and SME performance. The study also found a significant positive relationship between financial awareness and SME performance. Regarding how financial attitudes relates to SME performance, the study uncovered an insignificant positive relationship. The study recommends the government to invest in enhancing the financial literacy level of medium scale enterprise owners through trainings and incorporating financial literacy issues in formal education.