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Financial literacy and SMEs’ potential entrepreneurs: The case of Malaysia

Author

Listed:
  • Noraizan Ripain

    (Faculty of Business, Economics and Accountancy, Universiti Malaysia Sabah, Kota Kinabalu, Malaysia)

  • Sharifah Milda Amirul

    (Faculty of Business, Economics and Accountancy, Universiti Malaysia Sabah, Kota Kinabalu, Malaysia)

  • Rasid Mai

    (Faculty of Business, Economics and Accountancy, Universiti Malaysia Sabah, Kota Kinabalu, Malaysia)

Abstract

Malaysia, like many other countries, is depending on Small and Medium Enterprises (SMEs) activities in generating national income, creating job opportunities and tapping local and overseas market. As such country like Malaysia is putting a great effort to nurture entrepreneurs to become SME players by providing infrastructure, financial assistance, skills, training and conducive ecosystem for entrepreneurial development. One of the important aspects to address is the ability of the entrepreneurs to manage financial matters effectively. The ability, so called financial literacy, is important for the survival of the enterprise, as acknowledged by many. Practitioners and researchers have proved the significance of financial literacy in determining the success and failure of enterprise management, particularly among young entrepreneurs. As such it is important to understand and investigate the level of financial literacy among entrepreneurs. This paper is presenting a case to investigate the level of financial literacy among the participants of an entrepreneur development program, organised by a State in Malaysia, through a special program entrusted to an implementing agency. The objective of the program is to nurture potential entrepreneurs to develop the development corridor gazetted by the Federal Government in the State. Since the success of this program is critical to the overall objective of the gazetted development corridor this paper intends to investigate the level of financial literacy among the participants, as the main objective of the case. Accordingly, the next objective is to enlighten the importance of enhancing financial literacy so as to provide input to the policy makers and implementing agencies in relevant projects. By employing quantitative approach through questionnaire survey and interview, this paper found that the level of financial literacy among SMEs’ players, particularly those selected to be nurtured as new entrepreneurs is still alarming (Chamwada, 2015). As such this paper advocates the importance of education in financial management among selected participants of entrepreneurial development program as well as formulating a sound monitoring system as part of a good ecosystem in nurturing entrepreneurs to become SME players. Finally the finding of this paper offers an insight evidence to strengthen financial literacy theory, therefore, this paper makes some suggestion regarding the potential coverage of a more comprehensive future study.

Suggested Citation

  • Noraizan Ripain & Sharifah Milda Amirul & Rasid Mai, 2017. "Financial literacy and SMEs’ potential entrepreneurs: The case of Malaysia," Journal of Administrative and Business Studies, Professor Dr. Usman Raja, vol. 3(2), pages 60-68.
    • Handle: RePEc:apb:jabsss:2017:p:60-68
    DOI: 10.20474/jabs-3.2.1
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    References listed on IDEAS

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    1. Flora Wang, 2016. "What are the biggest obstacles to growth of SMEs in developing countries? - A picture emerging from an enterprise survey," Working Papers IES 2016/09, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised May 2016.
    2. Yao Wang, 2016. "What are the biggest obstacles to growth of SMEs in developing countries? – An empirical evidence from an enterprise survey," Borsa Istanbul Review, Research and Business Development Department, Borsa Istanbul, vol. 16(3), pages 167-176, September.
    3. Garba Musa, 2016. "The Role of Accounting Education Towards the Development of Small and Medium Enterprises in Jigawa State," International Journal of Business and Administrative Studies, Professor Dr. Bahaudin G. Mujtaba, vol. 2(4), pages 96-102.
    4. Elisabeth Penti Kurniawati & Akhsa, 2016. "Effect analysis of the use of accounting information, managerial performance and employee performance Towards SMEs," Journal of Administrative and Business Studies, Professor Dr. Usman Raja, vol. 2(3), pages 131-142.
    5. Jane Njaramba & Philemon Chigeza & Hilary Whitehouse, 2015. "Financial literacy:the case of migrant African-Australian women entrepreneurs in the cairns region," Entrepreneurship and Sustainability Issues, VsI Entrepreneurship and Sustainability Center, vol. 3(2), pages 198-208, December.
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