Assessing the Level of Financial Literacy Among Business Owners: A Case Study of Kumasi Metropolitan Assembly of Ashanti Region, Ghana

ABSTRACT

This study investigated the level of financial literacy among business owners within the Kumasi Metropolitan Assembly. It also identified the factors affecting the level of financial literacy among small and medium businesses. Questionnaires were developed and administered to 100 selected business owners within the study area. Multiple Regression analysis was performed to test for the relationship between factors that affects people’s financial literacy. Results indicate that majority of respondents have not had any form of education. Business owners (respondents) were asked to state whether or not they are responsible for managing the finances of their enterprises. The results show that 74% of the respondents are the financial managers of their business as against 26% who said they employ the services of professionals to manage their finances for them. It was revealed that most of the respondents do not apply best practices in managing their businesses. They do not have business plan for their businesses and also do not prepare cash flow forecast. A multiple regression analysis conducted found respondents’ level of education (b = -0.345, p = 0.000), to be the only factor which influences their level of financial knowledge. Other factors such as age, gender, field of study and years in business have no influence on respondents’ level of financial knowledge. Based on the results of this study, workshops should be organised by the Association of Ghana Industries (AGI) on proper financial management so as to ensure prudent and efficient financial management practices among business owners. The study also recommend that business owners and potential business owners should be educated by the AGI on some of the basic financial issues and best practices in the course of their studies or training irrespective of their field of study, so as to develop a nation of financially literate business people.