Financial Literacy and Financial Performance of Small and Medium Enterprises SMES among Selected Firms in Lagos State

There is a perception that SMEs in Nigeria tends to lack skills and knowledge needed to run their businesses profitably. This also tend to have direct impact on the financial performance of SMEs as the small business owners may not be proficient in financial education. This paper examined the role of financial literacy in enhancing the financial performance of SMEs among selected firms in Lagos State. In order to achieve the objective of this paper, some research questions were raised and hypotheses formulated. Various literatures relating to financial literacy and financial performance were reviewed in ordered to establish a relationship between the two constructs under investigations. The study made used of primary data sourced from questionnaires administered to respondents. The research design adopted was survey research design and correlational research design. Three hundred and eighty four SMEs firms were selected from the twenty local government councils in Lagos State. The ordinary least square regression technique was used to analyze the role of financial literacy in enhancing the financial performance of SMEs. The result of the analysis revealed that a relationship exist between financial literacy and financial performance. The study further revealed that SMEs in Lagos State are lacking in financial education poor in financial knowledge weak in cash flow management lack financial discipline amongst others. It is therefore concluded that lack of financial literacy have undermined the financial performance of SMEs in Lagos State in particular and Nigeria in general. The study recommends that SMEs should engage the services of accountants and also send their owners and managers to attend accounting courses, trainings and seminars to provide the necessary basic knowledge of financial education to enable SMEs grow financially. Oguh Festus. A. | Adjene Veronica E. | Onaghise Osagie C. "Financial Literacy and Financial Performance of Small and Medium Enterprises (SMES) among Selected Firms in Lagos State" Published in International Journal of Trend in Scientific Research and Development (ijtsrd), ISSN: 2456-6470, Volume-7 | Issue-2 , April 2023, URL: https://www.ijtsrd.com.com/papers/ijtsrd55089.pdf Paper URL: https://www.ijtsrd.com.com/management/accounting-and-finance/55089/financial-literacy-and-financial-performance-of-small-and-medium-enterprises-smes-among-selected-firms-in-lagos-state/oguh-festus-a