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All Journal International Journal of Business, Management and Economics
Addo, Selma Dzifa
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Economics, Econometrics & Finance Social Sciences

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The Impact of Financial Literacy on Access to Finance: Does Risk Attitude Matter? Addo, Selma Dzifa; Asante, Joseph
International Journal of Business, Management and Economics Vol. 4 No. 1 (2023): International Journal of Business, Management and Economics
Publisher : Training & Research Institute - Jeramba Ilmu Sukses (TRI-JIS)

Show Abstract | Download Original | Original Source | Check in Google Scholar | DOI: 10.47747/ijbme.v4i1.1101

Abstract

The purpose of the paper was to assess the effect of financial literacy on the access to finance of SMEs. Thus, the study examined the effect of financial literacy on SMEs’ access to finance in developing economies. Data for the study was collected from SME owners/managers in Ghana through questionnaires. 396 questionnaires were analyzed. The Partial Least Square Structural Equation Modelling (PLS-SEM) was used as the main analytical tool. The study found a significant positive association between financial literacy and access to finance. Financial literacy also had a positive significant effect on risk attitude, whereas the link between risk attitude and access to finance was also found significant. Again, the study showed that risk attitude matters in the nexus between financial literacy and access to finance, as it was found to mediate the link between financial literacy and access to finance. Our findings affirm the dual process theory of reasoning where an entrepreneur’s decision to access finance is guided by two systems of thinking: the automatic unconscious system based on their risk attitude, and the deliberate conscious system where different considerations and models are weighed up based on their financial literacy, both of which serves to magnify or dampen rational decision-making to access business financing. The findings also affirm the Knowledge base view theory (KBV) that, financial literacy is a special strategic asset organizations can use to obtain a competitive advantage over competitors. Practically, SMEs will be encouraged to improve their financial literacy and risk attitude skills.
Does Risk Attitude Increase the Effect of Financial Literacy on Access to Finance? Addo, Selma Dzifa; Asantey, Joseph; Awadzie, David Mensah
International Journal of Business, Management and Economics Vol. 4 No. 3 (2023): International Journal of Business, Management and Economics
Publisher : Training & Research Institute - Jeramba Ilmu Sukses (TRI-JIS)

Show Abstract | Download Original | Original Source | Check in Google Scholar | DOI: 10.47747/ijbme.v4i3.1224

Abstract

The paper aimed to examine the moderating impact risk attitude has on the link between financial literacy and access to funding for SMEs. Respondents included SMEs in Accra via standardized questionnaires. 396 accurate responses were analyzed utilizing PLS-SEM. Findings showed an important beneficial correlation between knowledge of finances and credit accessibility. The relationship between risk-taking behavior and financial access also proved significant. Additionally, the study discovered that the connection between financial competence and financial access is significantly moderated by risk-taking tendency. The results support the knowledge base view theory, according to which financial literacy is a unique strategic asset that firms can exploit to gain an advantage over rivals. Additionally, it was established that risk-averse owners/managers are more likely to miss out on possibilities to build wealth, which opens up access to credit or even poses the willpower to access debt finance
Re-Examining The Financial Literacy – SME Growth Nexus: Fresh Evidence from Causal Mediation Analysis Addo, Selma Dzifa; Asante, Joseph; Mensah, Emmanuel
International Journal of Business, Management and Economics Vol. 4 No. 3 (2023): International Journal of Business, Management and Economics
Publisher : Training & Research Institute - Jeramba Ilmu Sukses (TRI-JIS)

Show Abstract | Download Original | Original Source | Check in Google Scholar | DOI: 10.47747/ijbme.v4i3.1225

Abstract

The importance of SMEs to the growth of emerging economies cannot be overemphasized. SMEs remain an important source of employment and economic growth for most developing economies. However, it has been found that, most SMEs in developing countries are unable to survive even up to their fifth year of operation due to a multiplicity of factors including the level of financial literacy and risk attitude of SME owners. The current study aims to examine the effect of financial literacy on SME growth mediated by the risk attitude of SME owners. The study’s data was collected from SME owners/managers in Ghana. 500 questionnaires were administered and out of the 432 retrieved, 400 were deemed useful for analysis using causal mediation. The study found a significantly positive association between financial literacy and SME growth in the main outcome model. Also, risk attitude was found to be positively related to financial literacy in the mediation model, whereas risk attitude further mediated the relationship between financial literacy and SME growth which demonstrates that risk attitude plays an intermediary role in the association between financial literacy and SME growth. Our results support the dual process theory of reasoning, according to which decisions made by entrepreneurs to improve the growth and sustainability of their businesses are influenced by two different systems of thought: the automatic unconscious system, which is based on their risk tolerance, and the intentional conscious system, which weighs numerous factors and models in light of their financial literacy.
Co-Authors Asante, Joseph Asantey, Joseph Awadzie, David Mensah Mensah, Emmanuel