An assessment of the financial literacy of owner-managers in Malta

Abstract

Purpose: This study investigates the level of financial literacy of owner managers in Malta, concentrating on their competence in the different areas addressed. Many businesses locally are owned and managed by the same individual, placing their financial capability into question. Design: A mixed-method approach was followed, consisting of both quantitative and qualitative methods. A questionnaire was created and distributed to owner managers based locally, to ascertain their business practices and financial literacy, and how these differ among variables such as gender and age. Seven interviews were held with professionals from the industry, and individuals involved in providing financial education to local citizens, to gather their perceptions on owner-managers. Findings: Results showed that owner-managers are not highly financially literate yet have a good understanding of how businesses work and of the fundamentals required to run a business. The findings suggest that experience has improved the business proficiency of owner-managers, signalling the importance that should be placed on education. Owner-managers are uninformed of many strategic tools used to improve business growth, yet there is a possibility these are made use of through entrepreneurial instincts as substantiated by professionals who work closely with such individuals. In Malta, men have been in business for a longer period of time than women, giving a strong basis for the finding that male owner-managers are more financially literate than female owner-managers. Conclusions: Financial literacy is a valuable tool that should be culminated by all owner-managers in Malta. Owner-managers should seek education in finance and business-related skills and surround themselves with professionals who have the skillsets they lack. Value: The findings are significant to local businesses who deal with owner managers on a regular basis, as well as to public institutions involved in training these individuals so that they can assimilate topics which should be prioritised.