A Study on the Influence of Financial Literacy on Financial Performance of Small and Medium Enterprises in Ruiru Town, Kiambu County, Kenya
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Date
2016
Authors
Kimunduu, Geoffrey
Erick, Otieno
Shisia, Adam
Journal Title
Journal ISSN
Volume Title
Publisher
International Journal of Economics, Commerce and Management
Abstract
Financial literacy has been identified as a one of the key competencies required for the
establishing, management and thriving of SMEs. However, the exact effect they have on the
financial performance of SMEs hasn’t been fully established by the available literature thus the
need for further research in this area. This study sought to establish the influence of financial
literacy on the financial performance of SMEs in Ruiru sub county, Kiambu County. A
descriptive survey design was adopted in conducting the study. The study population entailed
the registered SMEs in Ruiru Sub County and who have undergone some financial literacy
training by Equity bank through a programme known as financial knowledge for Africa (FiKA). A
sample of 100 respondents was selected out of the total population of 334 respondents. The
study used stratified sampling to get the sample of respondents. The data collected was
analyzed using SPSS and the significance of the results tested using inferential statistics. The
results of the multiple regressions revealed that there is a significant strong positive relationship between financial literacy and financial performance of SMEs. From the results, the study
concluded that high levels of financial literacy among SME owners led to higher financial
performance of SMEs. The study recommended that awareness be created to the SMEs on the
importance of being financially literate by encouraging them to participate in financial literacy
training programmes and also for the trainers to consider including ICT as one of units on which
participants will be trained.
Description
Article
Keywords
Financial Literacy, Skills Training, Small and Medium Enterprises, Financial Performance