The effect of financial literacy components (budgeting, investment analysis, and risk management) on SME sustainability: The mediating role of access to finance complemented by financial risk attitude

The economic growth of developing economies depends heavily on Small and Medium Enterprises (SMEs) since they generate significant GDP and employment numbers in Pakistan and other emerging markets. The sustainability of these businesses faces frequent obstacles because they encounter restricted financial resources and poor financial expertise alongside cautious managerial decision-making. This study explored how financial literacy affects SME sustainability. We proposed that financial literacy components i.e. budgeting, investment analysis, and risk management, improve access to finance in turn leading to SME sustainability. We also contend that financial risk attitude moderates the relationship between financial literacy components and sustainability in a way that a higher risk attitude would lead to a more pronounced effect. Empirical validity was established by conducting a survey using a close-ended questionnaire. A structured questionnaire was used to gather data from 309 SME owners financial managers and operational managers who resided in five major Pakistani cities. The analysis employed Partial Least Squares Structural Equation Modeling (PLS-SEM) to process the data. The results show that budgeting (β = 0.165, p = 0.010) and risk management (β = 0.424, p