Financial Risk Management Literacy and Its Effect on Financial Sustainability: Insights from Micro, Small and Medium Enterprises in Kakamega County
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Date
2025-10
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Journal ISSN
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Publisher
Stratford Peer Reviewed Journals and Book Publishing
Abstract
The objective of the study was to investigate how financial risk management literacy affects
financial sustainability of MSMEs in Kakamega County. The study was anchored on prospect
theory. Descriptive survey research design was adopted in the study in which the population
comprised of 645 managers and proprietors of MSMEs in the county drawn from trading,
manufacturing, distribution and service sectors in the county. The study sample comprised of 247
proprietors selected using stratified sampling technique. Primary data collected using structured
questionnaires was utilised in the study. Collected data was analysed using SPSS version 26. Both
descriptive statistics and inferential analysis were used in data analysis. Descriptive statistics
included mean score and standard deviation. Inferential analysis included Pearson's correlation
coefficient and multiple regression analysis. The coefficient of determination (R²), F-statistic, beta
coefficient and p-values were used in interpreting results. Results showed that MSMEs
demonstrated only modest levels of financial risk management literacy and MSMEs achieved
financial sustainability only to a limited extent, as many struggled with profitability, cash flow
adequacy, and revenue growth. Correlation analysis results showed that financial risk management
literacy showed a strong and positive correlation with financial sustainability. Regression analysis
confirmed that financial risk management literacy had a positive and statistically significant effect
on financial sustainability. It was thus concluded that financial risk management literacy had a
positive and statistically significant effect on financial sustainability of MSMEs in Kakamega
County.
Description
Research Article
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Citation
Kisambo Shitambasi, H., & Makori, D. (2025). Financial risk management literacy and its effect on financial sustainability: Insights from micro, small and medium enterprises in Kakamega County. Journal of Finance and Accounting, 9(5), 12–25. https://doi.org/10.53819/81018102t7075