An Examination of Financial Literacy Levels Amongst Owner/Managers of Small and Medium-Sized Enterprises

Abstract

To date there has been limited research focusing on the financial literacy of small and medium business sized business. This research looks specifically at the level of financial literacy among small business owners/mangers within an Australian context. The purposes of the hypotheses are to understand the relationship between the financial literacy of the owners/managers of small businesses against both their demographic and company characteristics. More specifically, the key research question investigated in this study is: what is the level of financial literacy among small business owners/managers, and what are the determinants of the level of literacy The research has significant implications for small business, as the reason given for many small business failures relates to the financial ability of owners/managers. Therefore, the research should provide consequential information to industry-groups, small businesses, financial institutions and policy makers. The literature review defines financial literacy and small business and looks at the literature to date with respect to the relevant hypotheses. The methodology for the dissertation will exploratory and quantitative in nature and will use a multiple choice questionnaire for a survey into business in Australia. The sampling frame will consist of professional members of the Australian Institute of Management. The findings show that overall financial literacy can improve for SME owner managers, and that education in particular can assist to increase overall financial literacy.