Financial Literacy Among Sme’s in Malaysia (original) (raw)

Analysis of Financial Literacy Factors for SMEs

Sustainable Collaboration in Business, Information and Innovation 13th 2022, 2022

Financial governance is a major issue in the operations of small and medium enterprises (SMEs). Financial literacy and financial management are intertwined. Increasing financial literacy in SMEs will help them to function more efficiently, prepare for their financial future, and increase economies of scale. This study aims to analyze the determinants that shape financial literacy in SMEs in Garut Regency. The research participants represent the state of the art in this study. SMEs in the food industry, which sell utilizing wheels (street food), make up the research participants. Exploratory Factor Analysis (EFA) is used in this study to analyze the elements that contribute to financial literacy. Five SME actors were interviewed to discover the elements that contribute to financial literacy, and a questionnaire was then provided to 70 SME actors as research samples. Financial behavior variables, financial planning elements, financial management factors, and financial control factors were discovered in the study's findings. These elements are thought to be capable of representing the financial literacy variable, in which SME actors' comprehension of these aspects influences effective decision-making about the use and management of financial resources, allowing SMEs to expand their business size in the long run.

The Antecedents of Financial Literacy and The Impact on SMEs’ Performance: A Conceptual Paper

International Journal of Academic Research in Business and Social Sciences

The aim of this study is to examine the level of expertise, training, and financial literacy of small and medium enterprises (SMEs) business managers and its impact on firm's performance. Most of the research in this area has been conducted outside Malaysia. Thus, there is a need to validate the financial literacy and SMEs performance relationship in the Malaysian environment due to the differences in culture, ways of thinking, legal and political situations. These differences lead to different responses, which might contribute to the different effect of financial literacy on SMEs performance. A questionnaire survey will be distributed among SMEs owners in Malaysia's manufacturing industry. It is hoped that the information provided in this study may improve the consistency of the existing evidence on SMEs performance by providing a deeper understanding on the relationship and expands the scope of the resource-based view theory and resource dependence theory from the perspective of SMEs.

FINANCIAL LITERACY: AN ESSENTIAL IN SMALL MEDIUM ENTREPRISES (SMEs) PERFORMANCE

Manajemen Bisnis, 2020

This study aims to examining the effect of financial literacy on the performance of Small and Medium Enterprises (SMEs) in Malang. This explanatory study was conducted in Sukun District, Malang City. The population was SMEs that located in Sukun District, Malang City which were selected using proportionate stratified random sampling with the total number of 220 samples. The study used descriptive quantitative design with primary data as the data source. The data was analyzed using Smart Partial Least Square (PLS) 3.3 Version with hypothesis tested using Bootstrap. The results of this study indicate that: 1) the financial literacy of the SMEs in Sukun District, Malang City was at a good literacy level which is Sufficient Literate; 2) the Small and Medium Enterprises in Sukun District has a good level of business performance; and Analysis of Smart PLS shows that financial literacy has a positive and significant effect on the performance of Small and Medium Enterprises in Sukun Distric...

SME’s financial literacy: An overview based on demographic aspects

Journal of Economics, Business & Accountancy Ventura

This study attempts to examine the financial literacy level of SME’s owner in East Java based on demographic aspect. The sample was taken from 65 SME’s in East Java which produce prominent local product. The data were collected by using survey method and deep interview. They were analyzed using descriptive explorative and also cross tabulation for examining SME’s financial literacy based on demographic attribute. Research found that that the financial literacy score of SME’s owner in East Java is good enough, where they have average score 55.8 with the same score of median and mode 66.7. Majority weakness of SME’s owner is the literacy on SME understanding of net asset and insurance premium. Otherwise, whole SME’s owner is fully understood that financial knowledge is so useful for the SME. Other finding shows that there is a relationship between financial literacy’s level and SME’s owner on demographic aspect such as gender, education, the business time established. It can be conclu...

The Effect of Financial Literacy and Financial Experience on SME Financial Behavior in Indonesia

Jurnal Dinamika Manajemen, 2019

The aim of this study is to examine the effect of financial literacy and financial experience on SMEs financial behavior in Indonesia.The dependent variable is financial behavior while independent variables are financial literacy and financial experience. There are four control variables used, namely company size, business length, age and education level of SME owner. The respondent sample is 42 owners of SMEs in Purwokerto Selatan. This study used multiple regression analysis. The results showed that financial literacy has no effect on financial behavior. Financial experience has a positive effect on financial behavior. While among four control variables, only company size has a significant negative effect on financial behavior. Three control variables have no significant effect on financial behavior. The implication of this study, SME owners have good financial experience will increase financial behavior. Therefore, it is very important to improve the financial experience of SME o...

Financial literacy and SME firm performance

The performance of the SME firm was viewed along the full proportions of financial, strategic and structural development. The socioeconomic function performed by SMEs is widely known in developing and emerging countries. But, in recent times, developing and developed nations have become more and more concerned about the level of financial literacy of the entrepreneur. This has emanated from peculiar to declining public and private to support systems and wide-ranging developments in the financial marketplace. Concern was also intensified by the challenging faced by the SME firm in financial context aided by the recognition that dearth of financial literacy has been one of the many elements responsible for lacks proper knowledge or information about financial decision making and that these decisions could, in turn, have tremendous unexpected consequences. Subsequently, financial literacy is now globally recognized as a major factor of economic and financial stability and development of SMEs for performance. A series of tangible trends underpin the growing worldwide interest in financial literacy as a major life skill, thus, this study set to review the influence of financial literacy on the performance of the SMEs from Nigeria's context. The study will serve as an information because that will promote and orient SMEs firm performance towards financial awareness, knowledge and perceive attitude. Also, the applied significant framework developed will assist SMEs firm owners and policy makers to identify the importance of financial literacy.

Financial literacy and SMEs’ potential entrepreneurs: The case of Malaysia

Malaysia, like many other countries, is depending on Small and Medium Enterprises (SMEs) activities in generating national income, creating job opportunities and tapping local and overseas market. As such country like Malaysia is putting a great effort to nurture entrepreneurs to become SME players by providing infrastructure, inancial assistance, skills, training and conducive ecosystem for entrepreneurial development. One of the important aspects to address is the ability of the entrepreneurs to manage inancial matters effectively. The ability, so called inancial literacy, is important for the survival of the enterprise, as acknowledged by many. Practitioners and researchers have proved the signi icance of inancial literacy in determining the success and failure of enterprise management, particularly among young entrepreneurs. As such it is important to understand and investigate the level of inancial literacy among entrepreneurs. This paper is presenting a case to investigate the level of inancial literacy among the participants of an entrepreneur development program, organised by a State in Malaysia, through a special program entrusted to an implementing agency. The objective of the program is to nurture potential entrepreneurs to develop the development corridor gazetted by the Federal Government in the State. Since the success of this program is critical to the overall objective of the gazetted development corridor this paper intends to investigate the level of inancial literacy among the participants, as the main objective of the case. Accordingly, the next objective is to enlighten the importance of enhancing inancial literacy so as to provide input to the policy makers and implementing agencies in relevant projects. By employing quantitative approach through questionnaire survey and interview, this paper found that the level of inancial literacy among SMEs' players, particularly those selected to be nurtured as new entrepreneurs is still alarming (Chamwada, 2015). As such this paper advocates the importance of education in inancial management among selected participants of entrepreneurial development program as well as formulating a sound monitoring system as part of a good ecosystem in nurturing entrepreneurs to become SME players. Finally the inding of this paper offers an insight evidence to strengthen inancial literacy theory, therefore, this paper makes some suggestion regarding the potential coverage of a more comprehensive future study.

Financial Literacy: An Empirical Study from Small–Medium Enterprises in Sidoarjo, East Java

KnE Social Sciences, 2019

One of the most important factors for the financial decision-making is financial literacy, which is the main topic of this study. The purpose of this research was to measure financial literacy from Small-Medium Enterprises perspective. In addition, this study was conducted to prove the differences in financial literacy based on demographic factors (gender, ages, SME's ages). The subjects of this study were Small-Medium Enterprises (SME's) in Sidoarjo Regency, East Java Indonesia. The financial literacy was measured by basic knowledge of financial literacy, credit management, investment management, and risk management. Independent T-test analysis and analysis of variance (ANOVA) were conducted during the research. It was found that there is no difference among financial literacy on education levels, demographic factors (gender, age, SME's ages). There is no difference in the level of financial literacy based on educational level. Gender, age of manager, and business ages are not the distinguishing factors in financial literacy. The results stated that the educational level, gender, age of managers and business ages does not affect financial literacy.

Financial literacy among small and medium enterprises in Zimbabwe

The Southern African Journal of Entrepreneurship and Small Business Management, 2019

Global concerns about financial literacy have heightened following the 2007/8 global financial crisis where it became apparent that lack of financial literacy was one of factors that contributed to the detrimental financial decisions taken. There is global recognition that poor financial decisions have a harmful overspill impact on financial and economic stability. In light of the importance of financial literacy in all economies, this study was conducted to ascertain the level of financial literacy among Small and Medium Enterprises (SMEs) in Zimbabwe that are key contributors to economic growth. The study was motivated by the need to develop a comprehensive financial literacy strategy which, if implemented, would enable business players to operate in the current financial landscape characterised by an influx of complex financial products. This research sought to relate financial literacy to financial product awareness and utilization and describe the financial behaviour of SMEs and their patterns of debt management. While governments across the world have expressed concern about the financial literacy levels of different population cohorts and have launched financial education programmes, Zimbabwe is lagging behind. Despite numerous initiatives by the government to support SMEs, business growth remains subdued, the sector remains financially excluded and many businesses fail within the first five years of operation. Research indicates that business failure is a result of poor financial management, hence it became necessary to establish the level of financial literacy of SMEs so that a comprehensive financial literacy strategy could be developed to address the phenomenon. A quantitative cross sectional research design was employed, with data collected by means of a questionnaire administered to a sample of 384 SMEs in Harare and Bindura district. The study"s findings revealed that financial knowledge was low, notably among the young and aged, those who are single, separated or divorced and, surprisingly, those with more business experience. Significant differences were noted across age groups, business sectors and years of experience in business. Although SMES exhibited positive and somewhat positive financial behaviour, a correlation analysis between financial literacy and financial behaviour revealed a weak positive relationship, calling for the need to seek strategies to address financial literacy. The study also established that SMEs are not aware of many financial products, nor do they utilize them. An association between financial knowledge and financial product awareness was noted, with those with high financial knowledge being aware of many financial products. However, no association was noted between financial knowledge levels and financial product viii utilization. Regarding debt behaviour, the research established that SMEs were not comfortable with their debt positions but because they were aware of the consequences of default, they made sure they met their financial obligations on time. In times of financial distress, friends and relatives were the main sources of funding and loans were beginning to gain popularity due to the increase in the number of micro finance institutions. On the whole, the research concluded that there is low financial literacy and low utilization of financial products among SMEs, but positive debt behaviour. The study recommended the introduction of financial education for SMEs and the development of the curriculum thereof, the increase in awareness campaigns, and an increase in access to information on financial products and services by the SMEs.

The Effects of Financial Knowledge, Socialisation, Attitude and Skill on Malaysian Smes’ Performance

International Journal of Industrial Management

Though considered trivial, small and medium enterprises (SMEs) were one of the contributing factors for Malaysia economy growth. Besides providing employment, SMEs also provide an improved integration to ensure other businesses survive in the long run. Thus, the present study examined the contributing factors to explain SMEs' performance, be it high or negative. Drawing upon the financial literacy theory, this study proposed a model of factors to examine the effects of financial knowledge, socialisation, attitude and skill on the performance of SMEs industry in Malaysia. The model was examined using owners of the SMEs drawn from 413 respondents collected in West Malaysia. Our results suggested that the said indicators were instrumental in determining the performance, and attitude was also essential as a mediator as discovered in our PLS analyses. In practice, however, this study jacked up a new understanding of why SMEs' performance is of importance, and the survey approach ...