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Culture, financial literacy, and SME performance in Ghana

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  • Samuel Kwaku Agyei

Abstract

This study extends the literature on financial literacy and cultural (Catholicism or Protestantism) beliefs to SME performance in a developing economy setting. Two basic questions motivated the study: (1) does culture influence financial literacy?; and (2) does culture mediate the relationship between financial literacy and firm performance in Ghana? The results, from 300 randomly sampled SME-Owners and based on Ordinary Least Squares and Logit regressions, suggest that cultural values militate against financial knowledge acquisition. Furthermore, Protestant beliefs strengthen the probability that SMEs would take advantage of growth opportunities due to financial literacy. Thus, the study concludes that the relationship between financial literacy and SME growth is cultural-context dependent. The study recommends that (1) religious bodies should inculcate financial education in their teachings; (2) financial literacy training programmes for SME-Owners should be tailored to meet their needs; and (3) cultural beliefs of SME-Owners should be of prime consideration in designing financial literacy programmes.

Suggested Citation

  • Samuel Kwaku Agyei, 2018. "Culture, financial literacy, and SME performance in Ghana," Cogent Economics & Finance, Taylor & Francis Journals, vol. 6(1), pages 1463813-146, January.
    • Handle: RePEc:taf:oaefxx:v:6:y:2018:i:1:p:1463813
    DOI: 10.1080/23322039.2018.1463813
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    Cited by:

    1. Musah, Alhassan & Yakubu, Ibrahim Nandom & Abagna, Matthew Amalitinga, 2022. "Financial Literacy: A Peep into the Literature and Note for Policy," MPRA Paper 115703, University Library of Munich, Germany.
    2. Antonio Molina-García & Julio Diéguez-Soto & M. Teresa Galache-Laza & Marta Campos-Valenzuela, 2023. "Financial literacy in SMEs: a bibliometric analysis and a systematic literature review of an emerging research field," Review of Managerial Science, Springer, vol. 17(3), pages 787-826, April.
    3. Samuel K. Agyei & Anokye M. Adam & Otuo S. Agyemang, 2019. "Financial Literacy, Cultural Dominance, and Financial Well‐Being of SME Owners in Ghana," Poverty & Public Policy, John Wiley & Sons, vol. 11(3), pages 222-237, September.
    4. Maran, Raluca, 2022. "Improving MSMEs’ access to start-up financing in ASEAN countries," MPRA Paper 114501, University Library of Munich, Germany.
    5. Jianmu Ye & KMMCB Kulathunga, 2019. "How Does Financial Literacy Promote Sustainability in SMEs? A Developing Country Perspective," Sustainability, MDPI, vol. 11(10), pages 1-21, May.
    6. Morshadul Hasan & Thi Le & Ariful Hoque, 2021. "How does financial literacy impact on inclusive finance?," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 7(1), pages 1-23, December.
    7. Martinson Ankrah Twumasi & Yuansheng Jiang & Zhao Ding & Pengcheng Wang & Wonder Abgenyo, 2022. "The Mediating Role of Access to Financial Services in the Effect of Financial Literacy on Household Income: The Case of Rural Ghana," SAGE Open, , vol. 12(1), pages 21582440221, February.

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