ASSESSING THE FINANCIAL LITERACY OF SMALL AND MEDIUM SCALE ENTERPRISE OPERATORS IN NIGERIA

Objectives: This study assessed the financial literacy of Small and Medium Enterprises (SMEs) in Osun State, Nigeria, recognizing their critical role in local and national economic development. The research aimed to explore the relationship between financial literacy and financial behaviour among SME operators and to identify factors influencing financial literacy. Theoretical Framework: The study was grounded in Behavioural Finance Theory, which suggests that financial decisions are influenced by psychological and behavioural factors, helping to understand how financial literacy shapes the financial behaviour of SME owners and managers. Method: A quantitative approach was used, targeting registered members of the Nigerian Association of Small-Scale Industrialists (NASSI) in Osun State. From a population of 1,622 business owners and managers, a sample of 313 respondents was selected using the Krejcie and Morgan formula. Structured questionnaires were employed for data collection, ensuring reliability and comprehensive coverage. Results and Discussion: The findings revealed a weak but statistically significant relationship between financial literacy and financial behaviour among SMEs in Osun State. While operators showed awareness of financial concepts, they struggled to effectively apply this knowledge in their decision-making. The results emphasize the need for targeted financial education and greater access to financial tools. Research Implications: This study offers valuable insights for policymakers and educators by advocating for a holistic strategy to improve financial literacy. Enhancing financial knowledge and resource access can foster economic growth and sustainability among SMEs. Originality/Value: This research contributes to the limited literature on SME financial literacy in Nigeria and highlights the importance of addressing behavioural factors to improve the financial well-being of SMEs.