FINANCIAL LITERACY ON FINANCIAL PERFORMANCE OF SMALL AND MEDIUM ENTERPRISES IN KAJIADO COUNTY, KENYA
Abstract
The purpose of the study was to examine and determine the efficacy of financial literacy on SMEs in Kajiado town. A descriptive research design was adopted. Specific objectives of the study were to examine budgeting literacy, bookkeeping literacy and savings literacy on financial performance of SMEs in Kajiado county. A business entity may be known to have ascertained growth or declined if its financial performance is known. In determining this, the study focused on business profit and business growth. Using financial literacy theory, transaction cost theory and resource-based theory, the study evaluated the factors that affect different levels of financial literacy and assessing the impact it had on both the long-life and success of the aforementioned businesses. In doing so, it related the previous studies that had identified the phenomenon in developing markets and made a case for the continued improvement of financial literacy as a policy tool to achieve economic growth. The target population was 46,100 registered and licensed SMEs as was indicated in the recent published Kajiado County Integrated Development Plan, 2018 -2022. The study used simple random sampling procedure from a sample size of 399 SMEs which were operating businesses in Kajiado County. The study survey employed primary data source to obtain information, where the main study instrument to collect the data was questionnaire comprising of questions each addressing study objectives. Descriptive analysis was adopted to provide statistics in percentages. The collected data was analyzed and presented in the form of tables and charts. In addition, inferential statistics involved Pearson correlations regression analyses were applied. The study found that financial literacy level is still quite low amongst the SMEs in Kajiado County. The study further found that Budgeting and Bookkeeping were still a major challenge amongst the respondents and savings had insignificant effect on their financial performance.
Key Words: Budgeting Literacy, Bookkeeping Literacy, Savings Literacy, Financial Performance
CITATION: Owuor, H. O., & Jagongo, A. (2023). Financial literacy on financial performance of small and medium enterprises in Kajiado County, Kenya. The Strategic Journal of Business & Change Management, 10 (2), 1380 – 1389.
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DOI: http://dx.doi.org/10.61426/sjbcm.v10i2.2671
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