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The Moderating Effect of Financial Literacy on the Relationship between Accounts Receivable Management Practices and Growth of SMEs in Kenya

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  • Mary Nelima SINDANI

    (Masinde Muliro University of Science and Technology, Kenya)

Abstract

Financial literacy may be defined as the ability of an individual to identify how money may be utilized, managed, so that he/she earn and grow it to improve his financial status and that of others which in the long run improves the economy as a whole. Statistics from FinAccess Kenya indicate that close to 76 per cent Kenyan adults do not adequately understand key financial concepts. The purpose of the study was to establish the moderating effect of financial literacy on the accounts receivable management practices and growth of SMEs. The findings revealed that financial literacy moderates the relationship between ARM practices and growth of SMEs. This can be supported by the regression results which revealed a positive and significant moderating effect. The magnitude of the effect was significant and illustrated that the interactive factor increased the way accounts receivable management practices affected growth of SMEs. The findings would form a basis for government and policy makers to formulate strategies and policies that would help reduce the levels of financial literacy among the adult population.

Suggested Citation

  • Mary Nelima SINDANI, 2019. "The Moderating Effect of Financial Literacy on the Relationship between Accounts Receivable Management Practices and Growth of SMEs in Kenya," Expert Journal of Finance, Sprint Investify, vol. 7(1), pages 1-7.
  • Handle: RePEc:exp:finnce:v:7:y:2019:i:1:p:1-7
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    References listed on IDEAS

    as
    1. A.K. Sharma & Satish Kumar, 2011. "Effect of Working Capital Management on Firm Profitability," Global Business Review, International Management Institute, vol. 12(1), pages 159-173, February.
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    More about this item

    JEL classification:

    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies

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