The relationship between financial literacy and financial performance of registered small enterprises in Ga-Rankuwa.
Mogale, Peter
Mogale, Peter
Citations
Altmetric:
Abstract
Purpose / research objective: The goal of this study was to investigate and determine the relationship between the financial literacy of small business owners and the performance of their businesses in the Ga-Rankuwa area north of Tshwane.
Methodology: The study used a quantitative methodology and employed a structured questionnaire that was administered to owners of small businesses. A quantitative approach supported the study’s objectives in investigating the possible correlation between financial literacy and business performance. The collected data were analysed using STATA / small enterprise, version 17. Both descriptive and inferential statistical analyses were conducted to understand the distribution of the study participants and financial literacy. Multiple linear regression was performed to assess associations between the predictor variables (socio-demographic attributes and financial literacy) and the return on assets (ROA).
Findings: The small enterprises recorded low to modest profits but a higher ROA. Significant correlations exist between family size, income level, and ROA, which challenges assumptions about education and experience in predicting performance. Financial performance demonstrated a positive correlation with financial literacy and access to finance, whereas knowledge and attitude showed insignificant associations. This finding suggests that financial literacy and access to finance are critical factors in determining financial performance.
Recommendations: Small enterprises should explore ways to increase profitability and invest in financial education. Authorities should improve access to financing for small enterprises and should consider reviewing the appropriateness and quality of education quality in as far as it contributes to financial literacy.
Description
Submitted in the fulfilment of the requirement of the degree Master of Business Studies in Finance in the Department of Finance and Investment, Faculty of Economics and Finance at the Tshwane University of Technology
Date
2024-06-11
Journal Title
Journal ISSN
Volume Title
Publisher
Tshwane University of Technology
Research Projects
Organizational Units
Journal Issue
Keywords
Financial literacy, Financial performance, Small enterprises, Ga-Rankuwa