13th Students’ Research Symposium 2023/2024
Permanent URI for this communityhttp://repository.kln.ac.lk/handle/123456789/29092
Browse
2 results
Search Results
Item The Effect of Financial Literacy on Firm Performance Through Mediation of Financial Access and Financial Risk Attitude: Evidence from Selected Trading MSME in Ratnapura District(Department of Finance, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka., 2025) Witharama, Y. W. K. M.; Weligamage, S. S.Introduction: Micro, Small and Medium Enterprises (MSMEs) are important players in economic development as they provide employment and contribute significantly to the GDP of both developed and developing nations. MSMEs face challenges such as limited financial literacy, limited access to financing and poor risk management skills which at the end results in financial failure of the business. Entrepreneurs who can manage their firms more effectively and make informed decisions have access to increased resources and are more effective at managing risks. This study examines the Effect of Financial Literacy on Firm Performance Through Financial Access and Financial Risk Attitude as Mediators. Methodology: This quantitative and deductive approach was followed, by the positivism philosophy, in an attempt to examine the research problem logically. Primary data were collected from 150 MSMEs using structured questionnaires. Descriptive statistics, correlation analysis, and mediation analysis were conducted using SPSS to evaluate the hypothesized relationships among financial literacy, financial access, financial risk attitude, and firm performance. Findings: The findings indicate a strong positive relationship between the financial literacy of the MSMEs and their performance. Financial literacy was found to have a direct effect on performance and improved the ability to acquire financial resources and positive risk attitudes, which came as partial mediators. MSMEs with more financial knowledge found it easier to obtain funds, manage risks, and deal with market changes and thus made better performance. Conclusion: The analysis demonstrates that targeted policy measures and educational programs on financial literacy should be incorporated into the agenda of MSME owners’ empowerment. Statistics reveal that with better information, entrepreneurs’ judgment is clear, resources are allocated better, and complex financial networks are exploited. Making finance available through efficient and uncomplicated lending and customized financial aid is critical to sustaining liquidity and fostering growth. Also, constructive risk attitudes allow MSME owners to embrace risks and mitigate uncertainties with confidence. These actions are important for establishing a nurturing environment that guarantees the viability and growth of micro, small and medium enterprises in developing countries.Item The Effect of Financial Literacy on Firm Performance Thorough Mediation of Financial Access and Financial Risk Attitude: Evidence from Selected Manufacturing MSME in Ratnapura District(Department of Finance, Faculty of Commerce and Management Studies, University of Kelaniya, Sri Lanka., 2025) Yatawatta, Y. S. K.; Weligamage, S. S.Introduction: The study assesses the effect of financial literacy on the growth of manufacturing micro, small and medium enterprises (MSMEs) in Ratnapura District, Sri Lanka while examining access to finance and financial risk as mediating variables. This study is based on the premise that MSME sector is critical in the economic development of a nation through employment creation, growth of the Gross Domestic Product (GDP), and investment in innovations. Even with this significance, financial literacy remains an area of concern especially in as far as the ability of MSMEs to have access to formal financial systems and making rational economic decisions is concerned. Methodology: A quantitative methodology was adopted that used a self-administered structured questionnaire designed for 145 MSME owners/managers. Data were analyzed using SPSS with the aid of regression and mediation analysis using Hayes’ Process Macro. Financial literacy, financial access, financial risk attitude and business performance were measured with the use of verified and standardized constructs. Findings: Having knowledge of finance leads to greater business results through more integration into the economy and a more diversified risk attitude. In addition, MSME loans, credit and other financial services are more accessible as financial education enables better risk assessment. Mediation analysis assists in establishing that financial literacy, firm performance and financial access, and financial risk attitude are all closely interrelated in a cause and effect cycle where each is mediating the other. Conclusion: Financial literacy in the case of owners of MSMEs is crucial in increasing their financial inclusion and risk profile therefore improving the success of their businesses. There is need for financial education, also measures to correct the problem of illiteracy should be taken. Other possible mediating variables and frameworks could be investigated in future studies and other geographical areas or sectors could be incorporated.