Abstract: This quantitative study investigated the
effects of financial literacy on the performance of small and medium-scale
enterprises (SMEs) in the greater Accra region of Ghana. Data was gathered from
150 owners or managers of SMEs using questionnaire as the data gathering
instrument. The data collected was analyzed using IBM SPSS statistical
software. The analysis was based on both descriptive and inferential
statistics, and the presentation of results were done using graphs and charts
as well as frequency distribution tables. The analysis of the correlations was
also carried out to determine if a relationship exists between the study
variables. The findings revealed that, although respondents were aware of many
sources of funds including loans from financial institutions, and have adequate
knowledge on the stock market, most of them have started their SMEs with
personal savings or loans from their friends and relatives. The results also
show respondents have adequate knowledge on debts and the effect that it has on
their businesses, the importance of assets, and the effects of liabilities to
their businesses. Apart from these dynamics, they also understand the effect of
other economic factors such as inflation, interest rates, and risks on their
businesses. The inferential statistics show significant positive relationship
between financial literacy and SME performance. The researchers, therefore,
concludes that the financial knowledge that SME operators in Ghana have has
positively affected the performance of their businesses. This is not merely an
assertion by the researchers based on the findings but also from the SME
operators who themselves confirm that their knowledge of finance has positively
affected the performance of their businesses. While SMEs demonstrate some level
of financial literacy, the findings suggest that further training programs are
essential to refine their financial skills and decision-making capabilities.
Keywords:
Financial literacy; SME Performance; Social Enterprises; Financial Services;
Small and Medium-scale Enterprises