IIARD International Institute of Academic Research and Development

INTERNATIONAL JOURNAL OF ECONOMICS AND FINANCIAL MANAGEMENT (IJEFM )

E-ISSN 2545-5966
P-ISSN 2695-1932
VOL. 9 NO. 5 2024
DOI: 10.56201/ijefm.v9.no5.2024.pg68.82

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Financial Literacy and Financial Performance of SMEs in Zamfara State, Nigeria

Bamidele Vincent Olawale, Ani Chibuike Francis & Murtala Muhammad Yusuf

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Abstract

This study examined the effect of financial literacy on the financial performance of small and medium- scale enterprises in Zamfara State, Nigeria. The study specifically examined the impact of financial knowledge, financial behaviour, and financial attitude on SMEs' financial performance. The human capital theory guided the study. A descriptive-correlational method of analysis was employed in this study. A sample of 250 SMEs was used from the total population of 1236 registered SMEs in Zamfara State, Nigeria. An inferential statistical tool, such as regression analysis, was employed to test the relationship between the variables. The study found that financial knowledge has a positive coefficient value of 0.916 with a t-statistical value of 5.674 at a p-value of 0.000 (P = 0.000<0.05), financial behaviour has a positive coefficient value of 0.599 with a t-statistical value of 5.823 at a p-value of 0.000 (P = 0.000<0.05), and financial attitude also has a positive coefficient value of 0.631 with a t- statistical value of 9.518 at a p-value of 0.000, which is less than the critical value of 5% (P = 0.000<0.05). The null hypotheses were rejected based on the results of the analysis. The study established a positive and significant relationship between financial literacy and the financial performance of SMEs. According to the study, business owners with excellent education qualifications, particularly in financial-related courses, make better use of their resources to have a robust return on assets in their businesses. The study also concludes that business owners with good financial behaviour and financial well-being make better financial decisions that improve their businesses' return on assets and profitability. The study recommends, among others, that business owners should improve their financial behaviour by keeping an eye on how their business is progressing on a frequent basis.

keywords:

Financial Literacy, Financial Performance, Financial Knowledge, Financial Behaviour,

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