EFFECT OF FINANCIAL LITERACY ON THE SURVIVAL OF SMALL AND MEDIUM SCALE ENTERPRISES IN EDO STATE, NIGERIA SMEs.

This study examined the effect of financial literacy on the survival of Small and Medium Scale Enterprises (SMEs) in Edo State, Nigeria. The specific objectives were to assess the impact of budgeting practices, cash management practices, financial reporting and analysis, and cost management practices on SME survival. The study adopted a descriptive survey research design and relied on primary data collected through structured questionnaires administered to SME owners and managers across selected sectors in Edo State. Data collected were analyzed using descriptive statistics and Ordinary Least Squares regression technique. The findings revealed that budgeting practices have a significant positive effect on the survival of SMEs, indicating that effective financial planning enhances business continuity. Cash management practices were also found to significantly influence SME survival, emphasizing the importance of managing cash inflows and outflows to avoid liquidity challenges. Similarly, cost management practices showed a significant positive effect on SME survival, suggesting that effective cost control improves business sustainability. Financial reporting and analysis exhibited a positive but statistically insignificant effect at the 5 percent level, implying that while financial reporting contributes to SME survival, its impact may be limited by inadequate utilization of financial information by SME owners. Overall, the regression model indicated that financial literacy components jointly have a significant effect on the survival of SMEs in Edo State. The study concludes that financial literacy is a critical determinant of SME sustainability and recommends targeted financial literacy training programs, improved cash flow monitoring, effective budgeting, and strengthened cost management practices to enhance SME survival. The findings provide valuable insights for policymakers, SME support institutions, and business owners seeking to promote sustainable SME development in Edo State, Nigeria.