EXPLORING THE NEXUS BETWEEN FINANCIAL LITERACY AND SMEs PERFORMANCE

Abstract

This study explored the nexus between financial literacy and performance of small and medium enterprises (SMEs) in Anambra State, Nigeria. The study was anchored on Human Capital Theory. The study used the cross-sectional research design to plan the study. The study conducted a census of all the one hundred and seventy one (171) business owner and managers of the selected SMEs from the target population. Complete enumeration was adopted and so there was no need for sampling as all the selected SMEs were used. Data were collected using structured questionnaire from the random sampled business owners and managers of the selected SMEs in Anambra State. The structured questionnaire was validated using face and content validity. The reliability of the measuring instrument was tested using Cronbach Alpha. Formulated hypotheses was analyzed using correlation analysis. The findings of the study revealed that there is significant and positive relationship between financial literacy and performance of SMEs. The study recommended that SMEs owners and managers need to undergo training programs on bookkeeping in order to improve their financial management practices and also SMEs need to encourage the adoption of effective capital budgeting strategies for optimal investment decisions.