FINANCIAL CAPABILITIES AND ENTREPRENEURIAL RISK APPETITE IN SELECTED SMALL AND MEDIUM-SIZED ENTERPRISES IN LAGOS, NIGERIA

Abstract

Entrepreneurial risk appetite plays a crucial role in the establishment and growth of Small and Medium-Sized Enterprises (SMEs) in Nigeria, forming a foundation for modern economic progress. Despite its significance, there is limited research on how financial capabilities shape entrepreneurial risk-taking in the country. This study investigated the impact of financial knowledge and attitudes on the risk appetite of SME operators in Lagos, using data collected from 374 participants across fifteen major markets in the city. The findings from regression analysis showed that both financial knowledge and attitudes strongly and positively influence entrepreneurial risk appetite. These results highlight the pivotal role of financial literacy in encouraging risk-taking among entrepreneurs. The study provides valuable insights for policymakers, educators, and practitioners, emphasizing the need for targeted strategies to support entrepreneurship within the SME sector. The government and stakeholders are encouraged to promote financial capabilities through hands-on and experiential learning initiatives, helping SME operators develop the skills and confidence needed to take calculated risks and thrive in a competitive economy.