The financial literacy of local SME business owners : an investigation

Abstract

Purpose: The main objective of this study is to investigate the situation of financial literacy of business owners by determining the importance and use of financial information within the firm, both in the day-to-day running of the business and also in the formulation of strategic long term goals. Simultaneously an evaluation of the role of the accountant as a contributor of financial information is carried out. Design: In order to obtain a general understanding of the financial literacy of SME business owners, a quantitative research tool was deemed best to meet the objectives of the study. Hence a questionnaire was developed covering the main areas of knowledge in which business owners should be versatile. Findings: The general findings of this research has established that business owners do have a degree of financial awareness, though not to the extent that enables them to understand and assess confidently the financial information within their firm in order to act accordingly. Conclusions: This study arrives to the conclusion that more has to be done in order to improve the level of financial literacy of business owners possibly by enforcing financial education. Value: This study is original as it is the first to investigate the level of financial literacy of SME business owners in the local scene.