Financial Literacy and Entrepreneurial Risk Attitude of Selected Small and Medium Sized Enterprises in Nigeria

Abstract

Abstract The importance of financial literacy as a source of information for making financial decisions has been acknowledged, but little research has been done on how it affects SMEs’ attitudes about taking risks. In order to examine the financial literacy and risk-taking behavior of small and medium-sized firms in Ekiti State, Nigeria, the research created an integrated model from a knowledge-based viewpoint. A survey research design was used for this study with a multi-stage sampling procedure. The study analyzed the primary data collected from the questionnaire. 154 managers and owners of SMEs in Ado-Ekiti, Ekiti State, made up the sample. According to the results of multiple regression, financial behavior, knowledge, and attitude all have a positive and substantial impact on how risk-averse small and medium-sized businesses in Ekiti State, Nigeria, are about taking risks. The study’s findings revealed that a high level of financial management literacy has a critical and significant influence on enhancing the entrepreneur’s risk-taking attitude, which leads to the growth of small businesses.