Effect of credit management and budgeting Financial Literacy on Performance SMEs in Nyeri County

Abstract

Purpose: The main purpose was to determine the relationship between financial literacy and the performance of small and medium enterprises in Nyeri County. The study was informed by the theory of planned behaviour.

Material/methods: The study comprised 1053 registered SMEs owners in Nyeri County. Cluster and random sampling techniques were used to select a sample size of 290 SMEs. Data were collected using structured questionnaires. Test-retest technique was employed to test the reliability of the data collection instruments. Descriptive statistics were used to analyze the data and data was presented in form of frequencies, tables, percentages, means and standard deviation. Inferential statistics and Pearson correlation was used to analyze data.

Findings: The findings are indicative of a significant effect of credit management financial literacy and budgeting financial literacy on SME performance.  

Conclusion: The findings suggest that credit management financial literacy and budgeting financial literacy have a significant effect on SME performance. This means that SMEs that are more financially literate are more likely to perform better than those who are not. Therefore, it is important for SMEs to ensure that they are financially literate in order to improve their performance.

Value: The value of the study is that it has established a significant effect of credit management financial literacy and budgeting financial literacy on SME performance. This is important because it means that these are important factors in determining the success of small businesses. This information can help policy-makers and financial educators to develop programs that better target the needs of small businesses.