Import of Financial Literacy on Performance of Small and Medium Sized Enterprises in Nigeria

Abstract

This study exhumes the aggregate implication of financial literacy on the performance of small and medium sized enterprises in Nigeria for the period from 1990 to 2019. The augmented Dickey-Fuller unit root test revealed a mixed order of integration and bounds test result to confirm that the variables of the model will not drift apart with the passage of time. The error correction model revealed that while the variables possessed self-mean reverting abilities in the event of any sudden shock, only financial ability and lag values of contributions of Small and Medium Scale Enterprises (SMEs) to growth had a positive impact on the productivity of small and medium sized businesses in the short term. However, both financial awareness and financial access produced negative results on growth in the short term. However, it was found that all three variables, financial awareness, financial access and financial ability, had a very significant positive impact on the productivity of small and medium sized businesses in the long term. It was therefore recommended that, funds meant for SMEs loans and grants should be increased, made known to them and the disbursed fund be adequately monitored to avoid diversion.