Financial Literacy Level of Owners/Managers of Micro and Small Enterprises in Addis Ababa City and its Determinants

No Thumbnail Available

Date

2018-06

Journal Title

Journal ISSN

Volume Title

Publisher

Addis Ababa University

Abstract

I Abstract Financial literacy is becoming a key life skill, for it helps individuals cope up with the very fast paced, digitalized and globalized financial landscape. This study aims at measuring how well the owners/managers of MSEs in Addis Ababa city are financially literate enough; and explaining their financial literacy level through demographic and socio-economic variables. Financial literacy level was measured through three indicator dimensions such as financial knowledge, behavior and attitude. Data was collected from a sample of 384 MSE owners/managers using self-administered questionnaire. Multi-stage random sampling was employed to select samples. The data was then analyzed using univariate, bivariate and multivariate analysis techniques. Cluster analysis was performed to classify respondents in to higher and lower financial literacy level groups, and generate dichotomous financial literacy data. Majority of the respondents (68%) were classified as having lower financial literacy level. In addition, the descriptive analysis discovered that most respondents lack the required level of financial knowledge, behavior and attitude. The binary logistic regression results revealed that financial literacy level of MSE owners/managers in Addis Ababa city can significantly be explained by their gender, level of education, business experience and cultural attitude. Educational level and business experience have significant positive effect, while cultural attitude has significant negative effect on the probability of joining the higher financial literacy level group for an MSE owner/manager. Men MSE owns/managers are found to have higher financial literacy level than women ones. The findings suggested that remedial measures need to be taken to enhance the financial literacy of MSE owner/managers. Financial education and training programs need to be facilitated in various ways.

Description

Thesis Submitted to Department of Accounting and Finance, Addis Ababa University in Partial Fulfillment of Master of Science Degree in Accounting and Finance

Keywords

Financial attitude, Financial behavior, Financial literacy

Citation