Effects of financial literacy on entrepreneurial intention among higher education students

Having the competency to handle financial affairs efficiently is essential for entrepreneurs who need to make informed decisions about their business finances. Financial literacy level is the drive and motivation of individuals to start and manage their own businesses. This present study aimed to investigate how financial literacy affects the intention of Ethiopian university students to become entrepreneurs. This study focused on students currently enrolled in Ethiopian higher education institutions. The participants were chosen because their institutions included entrepreneurship courses as part of their curriculum, which provided them with the knowledge needed for financial planning as well as specific entrepreneurship training. The research used a quantitative methodology with an explanatory research design. A questionnaire has been used as an instrument of obtaining data about how financial literacy impacts students’ entrepreneurial intentions. Out of 400 questionnaires given online, 365 replies were deemed appropriate for further research, yielding a high response rate of 91%. The data was analysed using partial least squares structural equation modelling (PLS-SEM) to construct both the measurement and structural model. The results of analysis showed that the survey instruments were reliable and valid for the study’s context. The findings also indicated that financial knowledge and attitude had a significant positive impact on entrepreneurial intention, while financial behaviour did not have a significant effect. Therefore, it is recommended that the government and other stakeholders need to provide financial literacy programs or other relevant initiatives to help students improve their skills in this area.