IMPACT OF FINANCIAL LITERACY AMONG SMALL MEDIUM ENTERPRISE OWNERS ON ENTERPRISE PERFORMANCE: A CONCEPTUAL FRAMEWORK DEVELOPMENT

Abstract

Small Medium Enterprises (SMEs) play a vital role and across all sectors of economy. Malaysia, like many other countries depend on SMEs in generating income, represent source of entrepreneurship abilities, creating job opportunities and expanding local and global market. The important aspect to be addressed is the ability of the SME owners to manage their financial matters effectively. One of the key success factors of the business is in financial management and it lies on the financial literacy of the company owners. Thus, the SMEs performance depends heavily on the financial literacy of the owners. In order to be financially literate, the owners must have financial knowledge, a well-defined attitude towards financial issues and a sense of financial awareness. Therefore, this paper has proposed a conceptual framework that consists of three variables namely, financial knowledge, financial attitude and financial awareness that would have impact on the performance of SMEs.