Research Article

EFFECT OF FINANCIAL LITERACY ON THE PERFORMANCE OF SMALL AND MEDIUM SCALE ENTERPRISES IN KADUNA NORTH LOCAL GOVERNMENT AREA.

Zakka Zubairu1*, Rahilahtu Ahmad Muhammad2, Maryam Abdu3
1 Department ofBusiness Administration and Entrepreneurship, Kaduna State University, Kaduna
2 Department of Business Administration, Kaduna State University
3 Department of Business Administration and Entrepreneurship, Faculty of Management Sciences, Kaduna State University
* Corresponding author: zakkazubairu@fmskasujournals.org.ng
Published: Jun, 2025
DOI: 10.68022/kbmr.2025.a4lzrxup
Pages: 121-134
Views: 10
Downloads: 5

Abstract

This study examines the impact offinancial literacy dimensions, financial knowledge, behaviour, and attitude on SME performance in Kaduna North, Nigeria, using Partial Least Squares Structural Equation Modelling (PLS-SEM). Data from 387 SMEs were analyZed using ADANCO 2.3 for structural equation modelling and SPSS for descriptive statistics. The results reveal distinct effects across financial literacy components: financial behaviour demonstrated the strongest positive influence (B = 0.443, p < 0.05), explaining substantial variance in performance, while financial knowledge showed a moderate but non-significant relationship (B = 0.337, p = 0.209). Financial attitude had negligible impact (8 = 0.172, p = 0.564), suggesting its effects may be context-dependent or mediated by other factors. The model accounted for 28.1% of performance variance (R? = 0.281), with financial behaviour emerging as the most critical driver of SME success. These findings align with the Resource-Based View, emphasizing executable financial practices as strategic resources in developing economies. The study reveals the need for SME development programs to prioritize 1.1. Introduction behaviour-focused financial training over abstract knowledge transfer, particularly in resource constrained settings. Policymakers should design targeted interventions that strengthen practical financial management skills, such as cash flow optimization and strategic reinvestment, to enhance business sustainability. The research contributes to financial literacy literature by clarifying dimension-specific effects in challenging economic environments and provides a methodological framework for similar studies. Future research should explore longitudinal effects and industry specific moderators to refine financial literacy interventions.

Keywords

financial literacy SMEperformance financial knowledge financial behaviour financial attitude

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How to Cite

Zubairu, Z., Muhammad, R. A., & Abdu, M. (2025). EFFECT OF FINANCIAL LITERACY ON THE PERFORMANCE OF SMALL AND MEDIUM SCALE ENTERPRISES IN KADUNA NORTH LOCAL GOVERNMENT AREA.. Kaduna Business and Management Reviews, 6(1), 121-134. https://doi.org/10.68022/kbmr.2025.a4lzrxup

Z. Zubairu, R. A. Muhammad, and M. Abdu, "EFFECT OF FINANCIAL LITERACY ON THE PERFORMANCE OF SMALL AND MEDIUM SCALE ENTERPRISES IN KADUNA NORTH LOCAL GOVERNMENT AREA.," Kaduna Business and Management Reviews, vol. 6, no. 1, pp. 121-134, June 2025. doi: 10.68022/kbmr.2025.a4lzrxup

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