IMPACT OF FINANCIAL LITERACY ON FINANCIAL PERFORMANCE OF SMEs IN ADAMAWA STATE
Abstract
This study examined impact of financial literacy on financial performance of SMES in Adamawa State, Nigeria. The study is a causal survey research design in which data were collected through a questionnaire administered to 384 respondents out of which 374 were collected from the respondents. Data collected was subjected to percentage analysis, and hypotheses were tested using regression analysis at the 0.05 level of significance. According to the findings the respondents strongly agreed that financial knowledge, financial behaviour, financial attitude and financial skills has significant and positive impact on financial performance of SMEs in Adamawa State. In addition, the finding further revealed that financial knowledge has impact on financial performance of SMEs in Adamawa State, Nigeria (b = 0.185, t = 2.613, P = 0.009). The finding shows that financial behaviour have impact on financial performance of SMEs in Adamawa State, Nigeria since (b = 0.070, t = 0.951, P = 0.042). Moreso, financial attitude has impact on financial performance of SMEs in Adamawa State, Nigeria (b = 0.190, t = 3.342, P = 0.001). Lastly, financial skills has impact on financial performance of SMEs in Adamawa State, Nigeria since (b = 0.203, t = 3.206, P = 0.001). The study recommends that, it is crucial for SME owners and managers to prioritize the development of financial knowledge. This can be achieved through targeted financial literacy programs and workshops designed to educate business owners on key financial principles, such as budgeting, financial planning, and investment strategies. Also, improving financial behaviour is essential for the financial success of SMEs. Business owners should adopt disciplined financial practices, including effective cash flow management, regular financial monitoring, and adherence to sound financial policies. It is recommended that SMEs develop and implement internal controls and financial management systems that promote responsible financial behaviour.
Keywords
Financial Attitude, Financial Behaviour, Financial Knowledge, Financial Literacy, Financial Skills, SMEs, Financial Performance