Financial literacy and small and medium enterprises performance: the moderating role of financial access

Purpose The current study examines the relationship between financial literacy and small and the performance of medium enterprises (SMEs), focusing on the moderating role of financial access. Design/methodology/approach The population of this study consists of present SMEs in Kuwait, from whom a sample of 155 businesses was chosen. This study adopted a cross-sectional time frame and analyzed the collected data using partial least square structural equation modeling, and Smart-pls 4 software was applied for calculation. Findings This research reveals that financial literacy significantly influences SME performance, consistent with previous studies, showing that higher financial literacy promotes entrepreneurs' financial management capabilities and enhances business outcomes. Also, the study supports that financial access significantly moderates this relationship, pointing out that adequate access to financial services boosts the benefits of financial literacy. Research limitations/implications Major implications of this study compromise the urgent need for customized financial literacy programs and policies promoting financial thoroughness, particularly in enhancing economies. The study recognizes limitations such as its cross-sectional design, small sample size and reliance on self-reported measures, suggesting further research use longitudinal approaches, a larger sample and objective measures. Practical implications The authors’ recommendations contain comprehensive financial literacy training, development of targeted financial education initiatives, promotion of sound financial management practices and policies to enhance financial access and inclusion, all aimed at boosting SME performance and contributing to economic growth. Originality/value To the best of the authors’ knowledge, this study is Kuwait’s first of its sort. Thus, the research is even more critical in Kuwait, where social and corporate values differ significantly. Therefore, this study aimed to investigate the relationship between financial literacy and the performance of Kuwait’s SMEs moderated by financial access.