Financial Literacy and Entrepreneurial Success among Small and Medium Enterprises in Ekiti State, Nigeria: An Empirical Analysis
Fayokemi Oluwabusayo Olomola, Awe Dayo Amos, Babalola Olatunji Oladapo
Abstract
This study empirically examines the relationship between financial success and entrepreneurial success of small and medium enterprises (SMEs) in Ekiti State, Nigeria. Based on a survey of 100 SME owners, the study examines how financial skills and financial knowledge influence business growth, operationalized as sales, customer base, asset, and profitability growth. Descriptive analysis confirms that SME owners possess medium to high levels of financial literacy and business growth. Pearson correlation analysis confirms that financial knowledge, financial skills, and business growth all possess significant positive correlations. Multiple regression analysis also shows that business growth is predicted best by financial knowledge (? = 0.835, p = 0.001) and financial skills (? = 0.921, p < 0.001), and years in business also have a positive contribution (? = 0.163, p < 0.001). The model accounts for 90.6% of the variance in business growth (R² = 0.906), demonstrating the critical role financial literacy plays in entrepreneurial success. However, education level has no statistically significant direct impact when the other variables are controlled. Implications of the findings call for targeted financial literacy interventions on less experienced business owners and women entrepreneurs. The study provides actionable suggestions to policymakers, development institutions, and financial institutions that are keen on optimizing SME growth and sustainability in developing economies.
Keywords
Financial literacy
financial knowledge
financial skills
regression analysis
business
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Journal of Management & Entrepreneurship Research, 6(9), 52-65.
Adewumi, S. A., & Cele, S. (2023). Financial literacy skills level among small and medium scale
businesses: Lessons for entrepreneurial decision-making in Lagos, Nigeria. Eureka: Social
and Humanities, 5(1), 52-65. https://doi.org/10.21303/2504-5571.2023.002799
Adeyombo, A., Ogunlusi, C., Oyelude, O., & others. (2024). Assessing the financial literacy of
small and medium scale enterprise operators in Nigeria. International Journal of
Professional Business Review, 9(11), 52-65.
Aiyedogbon, J. O., David, O. D., & Kelechi, E. P. (2023). Effect of financial literacy on the
performance of women owned SMEs in Nigeria: A study of Awka, Nigeria. International
Journal
of
Research
and
Innovation
in
Social
Science,
7(10),
81-
https://doi.org/10.47772/ijriss.2023.71050
Armen, A., Yulyani, S., & Ailani, A. W. (2023). Financial literacy and financial management
proficiency in micro, small, and medium enterprises. Jurnal Riset Manajemen Widyakarya,
1(3), 59-70. https://doi.org/10.59581/jrim-widyakarya.v1i3.3001
Astari, N. P. R. P., & Candraningrat, I. R. (2021). Financial literacy moderate the effect of fintech
on
the
financial
performance
of
micro,
small
and
medium
enterprises
(MSMEs). International Journal of Business Management and Economic Review, 3(1), 52-
https://doi.org/10.35409/ijbmer.2022.3410
Babajide, A. A., Osabuohien, E. S., & others. (2021). Financial literacy, financial capabilities, and
sustainable business model practice among small business owners in Nigeria. Journal of
Sustainable Finance and Investment, 11(3), 50–65.
Bamidele, V. O., Ani, F. C., & Murtala, M. Y. (2024). Financial literacy and financial performance
of SMEs in Zamfara State, Nigeria. International Journal of Economics and Financial
Management, 9(5), 68–82. https://doi.org/10.56201/ijefm.v9.no5.2024.pg68.82
Barney, J. (1991). Firm resources and sustained competitive advantage. Journal of Management,
17(1), 99–120. https://doi.org/10.1177/014920639101700108
Becker, G. S. (1964). Human capital: A theoretical and empirical analysis, with special reference
to education. University of Chicago Press.
Dewi, W. K., & Edt, R. W. (2023). Pengaruh literasi keuangan terhadap pengelolaan keuangan
usaha mikro kecil dan menengah. Target: Jurnal Manajemen Bisnis, 5(2), 45–
https://doi.org/10.30812/target.v5i2.3549
Eniola, A. A., & Entebang, H. (2017). SME managers and financial literacy. Global Business
Review, 18(3), 559–576. https://doi.org/10.1177/0972150917692063
Erhomosele, O., & Obi, O. V. (2022). The entrepreneur and his small business: Is financial literacy
important? European Journal of Business and Management Research, 7(3), 18-
https://doi.org/10.24018/ejbmr.2022.7.3.1461
Ibitomi, T., Dada, D. A., Aderotimi, B., & others. (2024). Financial literacy and performance of
small and medium scale enterprises in Abuja, Nigeria. European Journal of Business and
Innovation Research, 12(3), 72–90. https://doi.org/10.37745/ejbir.2013/vol12n36891
Ibor, B. I., Offiong, A. I., & Mendie, E. S. (2017). Financial inclusion and performance of micro,
small and medium scale enterprises in Nigeria. International Journal of Research, 5(3), 37–
https://doi.org/10.29121/GRANTHAALAYAH.V5.I3.2017.1758
Iriobe, O., Akinyede, O. M., & Iriobe, G. (2017). Financial literacy and financial inclusion for
entrepreneurship development in Nigeria. Social Science Research Network. 12(3), 72–90.
https://doi.org/10.2139/ssrn.3041234
Khyareh, M. M., & Zivari, A. (2023). Entrepreneurship development—Is financial literacy matter?
A literature review. European Journal of Applied Business and Management, 14(2), 559–
https://doi.org/10.26619/1647-7251.14.2.11
Leelavathi, K., & Ramesh, L. (2024). The role of financial literacy in advancing entrepreneurship:
Emerging insights from Chitradurga, Karnataka. ShodhKosh: Journal of Visual and
Performing Arts, 5(1), 20–35. https://doi.org/10.29121/shodhkosh.v5.i1.2024.2767
Liu, B., Wang, J., Chan, K. C., & others. (2021). The impact of entrepreneurs’ financial literacy on
innovation within small and medium-sized enterprises. International Small Business
Journal, 39(3), 82–98. https://doi.org/10.1177/0266242620959073
Musthafa, I., Handra, H., Bachtiar, N., & others. (2023). Financial literacy and performance of
micro, small and medium enterprises: A literature review. Marginal Journal of Management
Accounting General Finance and International Economic Issues, 3(1), 162–
https://doi.org/10.55047/marginal.v3i1.956
Odaumiebi, O. N. (2023). An investigation on the impact of financial literacy and the survival of
small and medium scale enterprises in Yenagoa, Bayelsa State. Journal of Accounting and
Financial Management, 9(8), 62–78. https://doi.org/10.56201/jafm.v9.no8.2023.pg1.11
Odebiyi, I. I., Fasesin, O. O., & Ayo-Oyebiyi, G. T. (2020). The financial literacy and small and
medium enterprises’ performance in Lagos State, Nigeria: An empirical approach. Journal
of Small Business and Entrepreneurship, 2(1), 20–35.
Oladunni, A. T., Vincent, O. O., Adiat, R. K., & others. (2025). An exploratory analysis of the
impact of financial literacy on the profitability of small-scale businesses in Suburban Lagos,
Nigeria. World
Journal
of
Advanced
Research
and
Reviews,
25(1),
559–
https://doi.org/10.30574/wjarr.2025.25.1.0174
Onwuegbuzina, I. J. (2022). Financial literacy and financial performance of micro, small and
medium enterprises in Lagos City, Nigeria. The International Journal of Business and
Management, 10(10), 20–35. https://doi.org/10.24940/theijbm/2022/v10/i10/bm2210-026
Philip, L. N. (2025). The role of financial literacy in driving sustainable entrepreneurial success:
A case study of Lapo Microfinance Institution (MFI), Nigeria. Issues and Perspectives in
Business and Social Sciences, 1(1), 62–78.
Sajuyigbe, A. S., Odetayo, T. A., & Adeyemi, A. Z. (2020). Financial literacy and financial
inclusion as tools to enhance small scale businesses’ performance in Southwest,
Nigeria. Finance and Economics Review, 2(3), 78-92. https://doi.org/10.38157/FINANCE-
ECONOMICS-REVIEW.V2I3.164
SMEDAN. (2023). Small and Medium Enterprises Development Agency of Nigeria.
Urefe, O., Odonkor, T. N., Chiekezie, N. R., & others. (2024). Enhancing small business success
through financial literacy and education. Magna Scientia Advanced Research and Reviews,
11(1), 102–124. https://doi.org/10.30574/msarr.2024.11.1.0123
Ulkhair, N., Siskawati, E., Almunawar, M. N., & others. (2023). The effect of financial literacy,
financial technology and income on small and medium enterprise financial
behaviour. Economic and Business Review, 2(2), 40-55.
Yeboah, G. (2020). The effects of financial literacy on the financial performance of small-scale
enterprise: The case of Makola Market. The International Journal of Management, 11(2),
62–78. https://doi.org/10.21522/TIJMG.2015.SE.19.02.ART020
Zai, S., Hulu, P. F., Bate’e, M. M., & others. (2024). The effect of financial literacy on financial
behavior of micro, small and medium enterprises (SMEs) in Ulugawo District, Nias
Regency. Golden Ratio of Data in Summary, 4(2), 559–576.
