Effect of Financial Literacy on the Growth of MSMEs

Abstract

This study assessed the effect of financial literacy on the growth of micro, small and medium enterprises (MSMEs) in Murg shopping mall, Abuja, Nigeria. The study utilised a descriptive survey research design wherein survey research instruments were employed. The study was carried out using a primary source in which qualitative data were collected using structured questionnaires and converted to quantitative data using five-point Likert scaling. An aggregate of 208 data collection instruments was administered, of which, 200 were properly filled and returned; representing a 96.1% returned rate. The data was then analysed with the application of inferential statistics like Regression and Analysis of Variance. Arising from the result, the null hypothesis was rejected since the calculated value was greater than the critical value (107.666>2.42). In conclusion, there was a significant effect of financial literacy on the growth of MSMEs in Murg Shopping Mall, Abuja. However, of the four proxies of financial literacy tested, debt management literacy had the highest positive impact on MSMEs? growth, followed by bookkeeping literacy and banking services literacy, whereas budgeting literacy was insignificant. It was therefore recommended that entities who wish to carry out effective corporate social responsibilities to grow MSMEs, should train them in the aspects of debt management literacy, banking services literacy and bookkeeping literacy.