THE ROLE OF FINANCIAL LITERACY IN ENTREPRENEURIAL SUCCESS: A STUDY OF SMALL BUSINESSES IN PAKISTAN

Abstract

This paper focuses on factors of financial literacy that determine the level of success of small business entrepreneurs in Pakistan. Through a quantitative approach, empirical data was obtained from 287 small business entrepreneurs across four major cities to examine the financial literacy level of the respondents as well as the link between financial knowledge, attitude, and behavior with the performance and sustainability of the business. The analysis shows that the results of checking the level of financial literacy are directly correlated with indicators such as revenue, revenue growth, and enterprise survival. In the context of the regression analysis, it is found that planning for finance, budgeting, and willingness to comprehend the concept of credit portray the different factors that tell about business success. This appears with differences based on the education level, area of living, whether urban or rural, and gender. Such gaps suggest the need for SMEs in Pakistan to be provided with specific financial literacy programs, which would improve their outcomes. Recommendations for change include: adding instruction on finance to entrepreneurship, devising literacy initiatives for sectors, and enhancing simple financial products and services.