Financial Literacy, Financial Behavior, Performance of Women Owned Enterprise in Rural Areas, Kenya
Main Article Content
Keywords
Financial Literacy, Performance, Women Owned Enterprise, Financial Behavior
Abstract
The purpose of this study was to determine the mediating effect of financial behaviour on the relationship between financial literacy and the performance of the womenowned enterprise in Rural Areas in Kenya. The study sampled 219 respondents from a target population of 488 women-owned enterprises in Nandi County. Data was collected using a 5-likert questionnaire and analyzed using Hayes Model 4. Results showed that investment and budgeting literacy significantly affected the performance of women-owned enterprises. Financial behaviour partially mediated the relationship between investment literacy and the performance of women-owned enterprises. The relationship between budgeting literacy and the performance of enterprises was also partially mediated by the financial behaviour of women entrepreneurs. The study concludes that women entrepreneurs with investment and budgeting literacy are likely to increase their business performance. Further, women with good financial behaviour are expected to employ the acquired investment and budgeting skills to improve business performance. The study recommends more emphasis on training women entrepreneurs in investments and budgeting. The study provides new insight into the link between financial literacy and the performance of women-owned enterprises via financial behaviour.
References
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Baporikar, Neeta & Akino, Susan. (2020). Financial Literacy Imperative for Success of Women Entrepreneurship. International Journal of Innovation in the Digital Economy. 11. 1-21. 10.4018/IJIDE.2020070101.
Buchdadi, A. D., Sholeha, A., & Ahmad, G. N. (2020). The influence of financial literacy on SMEs performance through access to finance and financial risk attitude as mediation variables. Academy of Accounting and Financial Studies Journal, 24(5), 1-15.
Chepngetich, P. (2016). Effect of financial literacy and performance SMEs. Evidence from Kenya. Evidence from Kenya.
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Eton, M., Gilbert, U., Fabian, M., Benard, P. O., & Dennis, O. (2019). Cash management and financial performance of business firms in Northern Uganda a Case of Lira District.
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Kalekye, P. N., & Memba, F. S., (2015). The Role of Financial Literacy on the Profitability of Women Owned Enterprises in Kitui Town, Kitui County, Kenya, International Journal of Science and Research, 4(6), pp. 2360
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Lawrence E. (2022). Debt Management Literacy and Financial Performance of Saccos in Kumi County – Kumi Uganda. International Journal of Current Science Research and Review, 05(01), 109–124. https://doi.org/10.47191/ijcsrr/V5-i1-13
Mberia, C., & Wachira, K., (2021). Influence Of Budgeting and Debt Management Literacy Training on Financial Performance Of Equity Bank Trained Women Self Help Groups In Machakos Town, Kenya. International Journal of Entrepreneurship and Project Management, 6(1), 1 – 11. https://doi.org/10.47604/ijepm.137
Mberia, C., & Wachira, K., (2021). Influence of Budgeting and Debt Management Literacy Training on Financial Performance of Equity Bank Trained Women Self Help Groups In Machakos Town, Kenya. International Journal of Entrepreneurship and Project Management. 6. 1-11. 10.47604/ijepm.1378.
Minority Rights Group International (2020)
Mishra, A. K. (2015). Impact of capacity building on women entrepreneurs – A literature analysis. Intern. J. Multidiscipl. Res. Dev. 2, 344–348. doi: 10.22271/ijmrd
Munene, Evans (4 November 2019). "2019 Kenya Population and Housing Census Results". Kenya National Bureau of Statistics. Retrieved 30 May 2020.
Mwaniki, (2014). Influence of financial literacy training on financial performance of Women Self Helps on Equity bank customers Isiolo Branch, Meru County.
Nguyen, G. N., Hoang, T. G., Nguyen, T. M., & Ngo, T. T. (2021). Challenges and enablers of women entrepreneurs’ career advancement in Vietnam’s coffee industry. Journal of Enterprising Communities: People and Places in the
Global Economy, 15(1), 76-95.https://doi.org/10.1108/JEC-04-2020-0075
Nyale, A., & Omar, N. (2020). Influence of financial literacy on growth of start-up businesses in Mombasa County. The Strategic Journal of Business & Change Management, 7(1), 810 – 826.
Ogutu A. W., Kiragu D., & Ngunyi A. (2019) Mohammed Shano4 Effect of Investment Management Practices on Sustainability of Private Hospitals in Nairobi, Kenya, International Journal of Science and Research (IJSR) 10(1), p. 864-870
Purwidianti, W., Tubastuvi, N., Darmawan, A., & Rahmawati, I. Y. (2022, January). Does Financial Behavior Mediate The Relationship Between Financial Literacy and Financial Experience Towards Financial Performance of Small Businesses?. In International Conference on Sustainable Innovation Track Accounting and Management Sciences
(ICOSIAMS 2021) (pp. 235-241). Atlantis Press.
Quintiliani, A., Modina, M., & Arnone, M (2018). The role of financial literacy on financial performance of SMEs.
Rahman, M., Isa, C. R., Masud, M. M., Sarker, M., & Chowdhury, N. T. (2021). The role of financial behaviour, financial literacy, and financial stress in explaining the financial well-being of B40 group in Malaysia. Future Business Journal, 7(1), 1-18.
Sadalia, I., & Butar-Butar, N. A. (2017, March). Financial Behavior and Performance on Small and Medium Enterprises in Coastal Area of Medan City. In IOP Conference Series: Materials Science and Engineering (Vol. 180, No. 1, p. 012257). IOP Publishing.
Stolper, O. A., & Walter, A. (2017). Financial literacy, financial advice, and financial behavior. Journal of business economics, 87(5), 581-643.
Sugiyanto, T., Radianto, W. E., Efrata, T. C., & Dewi, L. (2019, October). Financial literacy, financial attitude, and financial behavior of young pioneering business entrepreneurs. In 2019 International Conference on Organizational Innovation (ICOI 2019) (pp. 353-358). Atlantis Press.
Tumba, N. J., Onodugo, V. A., Akpan, E. E., & Babarinde, G. F. (2022). financial literacy and business performance among female micro-entrepreneurs. Investment Management and Financial Innovations, 19(1), 156-167. doi:10.21511/imfi.19(1).2022.12
Widyastuti, U., Sumiati, A., Herlitah, H., & Melati, I. (2020). Financial education, financial literacy, and financial behaviour: what does really matter?. Management Science Letters, 10(12), 2715-2720.
Yakob, S., Yakob, R., BAM, H. S., & Ahmad Rusli, R. Z. (2021). Financial literacy and financial performance of small and medium-sized enterprises. The South East Asian Journal of Management.
Yasin, R. F. F., Mahmud, M. W., & Diniyya, A. A. (2020). Significance of financial literacy among women entrepreneur on halal business. Journal of Halal Industry & Services, 3. 10.36877/jhis.a0000076.
Al Rahahleh, N. (2022). Financial Literacy Levels among Saudi Citizens across Budgeting, Saving, Investment, Debt, and Insurance Dimensions. Journal of Risk and Financial Management, 15(12), 582.
Ali, H., Omar, E. N., Nasir, H. A., & Osman, M. R. (2018). Financial literacy of entrepreneurs in the small and medium enterprises. In Proceedings of the 2nd Advances in Business Research International Conference: ABRIC2016 (pp. 31-38). Springer Singapore.10.1007/978-981-10-6053-3_4.
Anshika, A. & Singla, A. (2022), "Financial literacy of entrepreneurs: a systematic review", Managerial Finance, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/MF-06-2021-0260
Awais, M., Laber, M. F., Rasheed, N., & Khursheed, A. (2016). Impact of financial literacy and investment experience on risk tolerance and investment decisions: Empirical evidence from Pakistan. International Journal of Economics and Financial Issues, 6(1), 73-79.
Baporikar, Neeta & Akino, Susan. (2020). Financial Literacy Imperative for Success of Women Entrepreneurship. International Journal of Innovation in the Digital Economy. 11. 1-21. 10.4018/IJIDE.2020070101.
Buchdadi, A. D., Sholeha, A., & Ahmad, G. N. (2020). The influence of financial literacy on SMEs performance through access to finance and financial risk attitude as mediation variables. Academy of Accounting and Financial Studies Journal, 24(5), 1-15.
Chepngetich, P. (2016). Effect of financial literacy and performance SMEs. Evidence from Kenya. Evidence from Kenya.
Dwiastanti, A. (2015). Financial Literacy as the Foundation for Individual Financial Behavior. Journal of Education and Practice, 6(33), 99-105.
Eton, M., Gilbert, U., Fabian, M., Benard, P. O., & Dennis, O. (2019). Cash management and financial performance of business firms in Northern Uganda a Case of Lira District.
Eton, M. (2019). financial literacy, cash management and business growth in Kampala city council authority, Uganda. 23.
Foster, B.; Sukono; Johansyah, M.D. (2022). Analysis of the Effect of Financial Literacy, Practicality, and Consumer Lifestyle on the Use of Chip-Based Electronic Money Using SEM. Sustainability, 14, 32. https://doi.org/ 10.3390/su14010032
Fuchs, M, & Berg, G. (2013). Bank financing of SMEs in five Sub-Saharan African countries: the role of competition, innovation, and the government.
Gichuki, C. N., Mulu-Mutuku, M., & Kinuthia, L. N. (2014). Performance of women owned enterprises accessing credit from village credit and savings associations in Kenya. Journal of global entrepreneurship research, 4, 1-13.
Hikmah,(2020). The Effect of Bookkeeping Literacy, Budgeting Literacy, And Financial Inclusion of SME Financial Performance In Semarang. SSRG International Journal of Economics and Management Studies 7(6), 22-26. https://doi.org/10.14445/23939125/IJEMS-V7I6P103
Hong, K. F., Sabri, M. F., Magli, A. S., Abd Rahim, H., Mokhtar, N., & Othman, M. A. (2021). The Effects of Financial Literacy, Self-Efficacy and Self-Coping on Financial Behavior of Emerging Adults. The Journal of Asian Finance,
Economics and Business, 8(3), 905–915. https://doi.org/10.13106/JAFEB.2021.VOL8.NO3.0905
ILO (2010). Women in labor markets. Measuring progress and identifying change. Geneva, Switzerland: ILO
Inter-American Development Bank (2015). Women entrepreneurs: too often trapped in the microenterprise ghetto.
International Finance Corporation (2018). Strengthening Access to Finance for Women-Owned SMEs in Developing Countries
Janor, H., Yakob, R., Hashim, N. A., & Aniza, C. W. C. (2016). Financial literacy and investment decisions in Malaysia and United Kingdom: A comparative analysis. Malaysian Journal of Society and Space, 12(2), 106–118
Jemal L., (2019) Effect of Financial Literacy on Financial Performance of Medium Scale Enterprise; Case Study in Hawassa City, Ethiopia, International Journal of Research in Business Studies and Management, 6(1), Issue 11, 2019, PP 33-39
Kaberia, S. K., & Muathe, S. (2021). Effect of Covid-19 pandemic on performance of women owned micro, small and medium enterprises in Kenya. Int'l J. Soc. Sci. Stud., 9, 7. 9. 7. 10.11114/ijsss.v9i1.5089.
Kalekye, P. N., & Memba, F. S., (2015). The Role of Financial Literacy on the Profitability of Women Owned Enterprises in Kitui Town, Kitui County, Kenya, International Journal of Science and Research, 4(6), pp. 2360
Khan, F., Siddiqui, M. A., & Imtiaz, S. (2022). Role of financial literacy in achieving financial inclusion: A review, synthesis and research agenda. Cogent Business & Management, 9(1), 2034236.
Lawrence E. (2022). Debt Management Literacy and Financial Performance of Saccos in Kumi County – Kumi Uganda. International Journal of Current Science Research and Review, 05(01), 109–124. https://doi.org/10.47191/ijcsrr/V5-i1-13
Mberia, C., & Wachira, K., (2021). Influence Of Budgeting and Debt Management Literacy Training on Financial Performance Of Equity Bank Trained Women Self Help Groups In Machakos Town, Kenya. International Journal of Entrepreneurship and Project Management, 6(1), 1 – 11. https://doi.org/10.47604/ijepm.137
Mberia, C., & Wachira, K., (2021). Influence of Budgeting and Debt Management Literacy Training on Financial Performance of Equity Bank Trained Women Self Help Groups In Machakos Town, Kenya. International Journal of Entrepreneurship and Project Management. 6. 1-11. 10.47604/ijepm.1378.
Minority Rights Group International (2020)
Mishra, A. K. (2015). Impact of capacity building on women entrepreneurs – A literature analysis. Intern. J. Multidiscipl. Res. Dev. 2, 344–348. doi: 10.22271/ijmrd
Munene, Evans (4 November 2019). "2019 Kenya Population and Housing Census Results". Kenya National Bureau of Statistics. Retrieved 30 May 2020.
Mwaniki, (2014). Influence of financial literacy training on financial performance of Women Self Helps on Equity bank customers Isiolo Branch, Meru County.
Nguyen, G. N., Hoang, T. G., Nguyen, T. M., & Ngo, T. T. (2021). Challenges and enablers of women entrepreneurs’ career advancement in Vietnam’s coffee industry. Journal of Enterprising Communities: People and Places in the
Global Economy, 15(1), 76-95.https://doi.org/10.1108/JEC-04-2020-0075
Nyale, A., & Omar, N. (2020). Influence of financial literacy on growth of start-up businesses in Mombasa County. The Strategic Journal of Business & Change Management, 7(1), 810 – 826.
Ogutu A. W., Kiragu D., & Ngunyi A. (2019) Mohammed Shano4 Effect of Investment Management Practices on Sustainability of Private Hospitals in Nairobi, Kenya, International Journal of Science and Research (IJSR) 10(1), p. 864-870
Purwidianti, W., Tubastuvi, N., Darmawan, A., & Rahmawati, I. Y. (2022, January). Does Financial Behavior Mediate The Relationship Between Financial Literacy and Financial Experience Towards Financial Performance of Small Businesses?. In International Conference on Sustainable Innovation Track Accounting and Management Sciences
(ICOSIAMS 2021) (pp. 235-241). Atlantis Press.
Quintiliani, A., Modina, M., & Arnone, M (2018). The role of financial literacy on financial performance of SMEs.
Rahman, M., Isa, C. R., Masud, M. M., Sarker, M., & Chowdhury, N. T. (2021). The role of financial behaviour, financial literacy, and financial stress in explaining the financial well-being of B40 group in Malaysia. Future Business Journal, 7(1), 1-18.
Sadalia, I., & Butar-Butar, N. A. (2017, March). Financial Behavior and Performance on Small and Medium Enterprises in Coastal Area of Medan City. In IOP Conference Series: Materials Science and Engineering (Vol. 180, No. 1, p. 012257). IOP Publishing.
Stolper, O. A., & Walter, A. (2017). Financial literacy, financial advice, and financial behavior. Journal of business economics, 87(5), 581-643.
Sugiyanto, T., Radianto, W. E., Efrata, T. C., & Dewi, L. (2019, October). Financial literacy, financial attitude, and financial behavior of young pioneering business entrepreneurs. In 2019 International Conference on Organizational Innovation (ICOI 2019) (pp. 353-358). Atlantis Press.
Tumba, N. J., Onodugo, V. A., Akpan, E. E., & Babarinde, G. F. (2022). financial literacy and business performance among female micro-entrepreneurs. Investment Management and Financial Innovations, 19(1), 156-167. doi:10.21511/imfi.19(1).2022.12
Widyastuti, U., Sumiati, A., Herlitah, H., & Melati, I. (2020). Financial education, financial literacy, and financial behaviour: what does really matter?. Management Science Letters, 10(12), 2715-2720.
Yakob, S., Yakob, R., BAM, H. S., & Ahmad Rusli, R. Z. (2021). Financial literacy and financial performance of small and medium-sized enterprises. The South East Asian Journal of Management.
Yasin, R. F. F., Mahmud, M. W., & Diniyya, A. A. (2020). Significance of financial literacy among women entrepreneur on halal business. Journal of Halal Industry & Services, 3. 10.36877/jhis.a0000076.
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Published
Mar 20, 2024
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How to Cite
Tarus , J. K., & Tarus , T. K. (2024). Financial Literacy, Financial Behavior, Performance of Women Owned Enterprise in Rural Areas, Kenya. Journal of Business, Economics and Management Research Studies, 2(1), 48–62. https://doi.org/10.69897/jobemrs.v2i1.85
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Original Articles
Author Biographies
John K. Tarus , Department of Accounting and Finance, Moi University, Eldoret, P. O. Box 3900 - 30100, Kesses, Eldoret, Kenya
Department of Accounting and Finance, Moi University, Eldoret, Eldoret, Kenya
Thomas K. Tarus , School of Graduate Studies, University of Kigali, Rwanda
University of Kigali, Rwanda