Exploring the Effects of Financial Knowledge on Better Decision-Making in SMEs

González-Prida V.; Pariona-Amaya D.; Sánchez-Soto J.M.; Barzola-Inga S.L.; Aguado-Riveros U.; Moreno-Menéndez F.M.; Villar-Aranda M.D. · Administrative Sciences (2025) · DOI: 10.3390/admsci15010024

Resumen

The knowledge on financial management highly matters as it assists the micro-entrepreneurs in the making of right and sustainable business decisions. This research seeks to examine the effects of financial literacy on microenterprise decision-making in order to improve rational decision-making in financial management. A structured questionnaire with Likert-scaled options was used to measure micro-entrepreneurs’ financial decision-making capacity in terms of information processing and decision-making. They demonstrate a favorable relationship between financial education and rationality, which refers to micro-entrepreneurs’ capacity to select from a range of acceptable options. Based on the findings presented in this research, it is suggested that greater efforts should be paid to the integration of financial literacy within any form of entrepreneurial training targeting improvement in sustainability dimensions and qualities of decisions made by micro-entrepreneurs. Through increased financial knowledge, micro-entrepreneurs can manage financial problems effectively and thereby support the growth of sustainable microenterprises. Moreover, such observations suggest that all future policies must focus on and incorporate financial literacy as the defining strategy towards the improvement of the microenterprise sector and, therefore, economic growth.

Instituciones: Universidad Peruana Los Andes