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FINANCIAL LITERACY AMONG SME’S IN MALAYSIA
Corresponding Author(s) : Omer Bin Thabet
Humanities & Social Sciences Reviews,
Vol. 7 No. 2 (2019): March
Abstract
Purpose of Study: The objective of this study is to investigate the financial literacy among the SMEs in food and beverage sectors in Malaysia.
Methodology: Small and Medium Enterprises (SMEs) play an important role in countries’ economic growth. However, the failure rate among SMEs getting higher. The literature stipulated that the lack of financial literacy is one of the main reasons caused this failure.
Results: The results of 122 returned questionnaires shows that the socio-demographic factors such as age and marital status have influenced SME’s financial literacy. Moreover, the financial attitude and financial behavior found to be positively related to the financial literacy among the SMEs.
Keywords
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- Agarwalla, S., S. Barua, J. Jacob and J. Varma, 2013. Financial literacy among working young in urban India. IIMA Working Paper No. 2013-10-02: 1-27.https://doi.org/10.2139/ssrn.2338723 DOI: https://doi.org/10.2139/ssrn.2338723
- Allgood, S. and W. Walstad, 2013. Financial literacy and credit card behaviours: A cross- sectional analysis by age. Numeracy, 6(2): 1-26.https://doi.org/10.5038/1936-4660.6.2.3 DOI: https://doi.org/10.5038/1936-4660.6.2.3
- Atkinson, A. and F.A. Messy, 2012. Measuring financial literacy: Results of the OECD/ international network on financial education (INFE) pilot study. OECD Working Papers on Finance, Insurance and Private Pensions No. 15: 1-73.
- Au, Y.H.N. and K.L. Tan, 2018. The influence of financial literacy towards risk tolerance. International Journal of Business and Society, 18(3): 469-484. DOI: https://doi.org/10.33736/ijbs.3139.2017
- Baron, R.M. and D.A. Kenny, 1986. The moderator-mediator variable distinction in social psychological research: Conceptual, strategic, and statistical considerations. Journal of Personality and Social Psychology, 51(6): 1173-1182. https://doi.org/10.1037//0022-3514.51.6.1173 DOI: https://doi.org/10.1037/0022-3514.51.6.1173
- Bhatt, 2017. Financial literacy: A holistic perspective. Asian Journal of Research in Banking and Finance, 7(6): 127-139.https://doi.org/10.5958/2249-7323.2017.00054.2 DOI: https://doi.org/10.5958/2249-7323.2017.00054.2
- Crossman, A., 2017. Understanding purposive sampling - an overview of the method and its application. Thoughtco. Available from https://www.thoughtco.com/purposive-sampling-3026727.
- Eagle, A.H. and S. Chaiken, 1993. The psychology of attitude. Orlando, FL: Harcourt Brace Jovanovich.
- Eniola, A. and H. Entebang, 2016. Financial literacy and SME firm performance. International Journal of Research Studies in Management, 5(1): 31-43. https://doi.org/10.5861/ijrsm.2015.1304 DOI: https://doi.org/10.5861/ijrsm.2015.1304
- Filipiak, U. and Y.M. Walle, 2015. The financial literacy gender gap: A question of nature or nurture? Courant Research Centre: Poverty, Equity and Growth Discussion Paper No. 176.
- Firli, A., 2017. Factors that influence financial literacy: A conceptual framework. 1st Annual Applied Science and Engineering Conference, IOP Conference Series: Materials Science and Engineering, 180(1).https://doi.org/10.1088/1757-899X/180/1/012254 DOI: https://doi.org/10.1088/1757-899X/180/1/012254
- Greenspan, A., 2002. Financial literacy: A tool for economic progress. Futurist, 36(4): 37-41.
- Hair, J.F., R.E. Anderson, R.L. Tatham and C. William, 1998. Multivariate data analysis. Upper Saddle River, NJ: Prentice Hall.
- Huston, S.J., 2012. Financial literacy and the cost of borrowing. International Journal of Consumer Studies, 36: 566- 572. https://doi.org/10.1111/j.1470-6431.2012.01122.x DOI: https://doi.org/10.1111/j.1470-6431.2012.01122.x
- Jariwala, H.V., 2013. To study the level of financial literacy and its impact on investment decision - an in-depth analysis of investors in Gujarat state. Gujarat: V. M. Patel Institute of Management, Ganpat University, Ganpat Vidyanagar.
- Jennifer, C.H.I. and Y.N. Chi, 2018. Profiling saltwater recreational anglers toward the threats of marine environment. International Journal of Management and Sustainability, 7(2): 72-82.https://doi.org/10.18488/journal.11.2018.72.72.82 DOI: https://doi.org/10.18488/journal.11.2018.72.72.82
- Khalifa, T.B., 2018. The politics of fear in the US political discourse about migration: An argument-based approach. Humanities and Social Sciences Letters, 6(2): 16-30.https://doi.org/10.18488/journal.73.2018.62.16.30 DOI: https://doi.org/10.18488/journal.73.2018.62.16.30
- Khan, S.N. and E.I.E. Ali, 2017. The moderating role of intellectual capital between enterprise risk management and firm performance: A conceptual review. American Journal of Social Sciences and Humanities, 2(1): 9-15.https://doi.org/10.20448/801.21.9.15 DOI: https://doi.org/10.20448/801.21.9.15
- Khemili, H. and M. Belloumi, 2018. Cointegration relationship between growth, inequality and poverty in Tunisia. International Journal of Applied Economics, Finance and Accounting, 2(1): 8-18.https://doi.org/10.33094/8.2017.2018.21.8.18 DOI: https://doi.org/10.33094/8.2017.2018.21.8.18
- Kimiyaghalam, F., S. Mansori, M. Safari and S. Yap, 2017. Parents' influence on retirement planning in Malaysia. Family and Consumer Sciences Research Journal, 45(3): 315-325.https://doi.org/10.1111/fcsr.12203 DOI: https://doi.org/10.1111/fcsr.12203
- Klapper, L. and G.A. Panos, 2011. Financial literacy and retirement planning: The Russian case. Journal of Pension Economics & Finance, 10(4): 599-618. https://doi.org/10.1017/S1474747211000503 DOI: https://doi.org/10.1017/S1474747211000503
- Kotzè, L. and A. Smit, 2008. Personal financial literacy and personal debt management: The potential relationships with new venture creation. South African Journal of Entrepreneurship and Small Business Management, 1(1): 35-50. https://doi.org/10.4102/sajesbm.v1i1.11 DOI: https://doi.org/10.4102/sajesbm.v1i1.11
- Likitrattanaporn, W., 2018. A study of language learning strategies for practical use through the process of cooperative learning. International Journal of Educational Technology and Learning, 3(1): 35-44.https://doi.org/10.20448/2003.31.35.44 DOI: https://doi.org/10.20448/2003.31.35.44
- Lusardi, A., 2008. Financial literacy: An essential tool for informed consumer choice? NBER Working Paper Series Financial, 1(Working Paper 14084): 1-29.https://doi.org/10.3386/w14084 DOI: https://doi.org/10.3386/w14084
- Lusardi, A. and O. Mitchell, 2008. Planning and financial literacy: How do women fare? American Economic Review, 98(2): 413-417. https://doi.org/10.1257/aer.98.2.413 DOI: https://doi.org/10.1257/aer.98.2.413
- Lusardi, A. and S.M. Olivia, 2011a. The outlook for financial literacy. In Financial Literacy: Implications for Retirement Security and the Financial Marketplace, edited by. O. S. Mitchell and A. Lusardi. Oxford: Oxford University Press. pp: 1-15. https://doi.org/10.1093/acprof:oso/9780199696819.003.0001 DOI: https://doi.org/10.1093/acprof:oso/9780199696819.003.0001
- Lusardi, A. and D. Scheresberg, 2013. Financial literacy and high-cost borrowing in the United States. NBER Working Paper, No.18969. The National Bureau of Economic Research, Cambridge, MA.https://doi.org/10.3386/w18969 DOI: https://doi.org/10.3386/w18969
- Mandell, L., 2006. Financial literacy: Improving education results of the 2006 national Jump$tart survey. Washington, DC: Jumpstart Coalition.
- Ming-Yen, T.W., S.C. Chong and S. Mid Yong, 2013. Exploring the factors influencing credit card spending behavior among Malaysians. International Journal of Bank Marketing, 31(6): 481-500.https://doi.org/10.1108/IJBM-04-2013-0037 DOI: https://doi.org/10.1108/IJBM-04-2013-0037
- Mohamad, F.S. and M. MacDonald, 2010. Savings behavior and financial problems among college students: The role of financial literacy in Malaysia. Cross-Cultural Communication, 6(3): 103 - 110.
- OECD, 2013. Financial literacy framework. In OECD (Ed.), PISA 2012 Assessment and Analytical Framework: Mathematics, Reading, Science, Problem Solving and Financial Literacy. Paris: OECD Publishing. pp: 139-166.https://doi.org/10.1787/9789264190511-7-en DOI: https://doi.org/10.1787/9789264190511-7-en
- OECD, 2014. PISA 2012 technical background. In OECD (Ed.), PISA 2012 Results: Students and Money: Financial Literacy Skills for the 21st Century. Paris: OECD Publishing, 4 :123-145.https://doi.org/10.1787/9789264208094-10-en DOI: https://doi.org/10.1787/9789264208094-10-en
- Potrich, A., K. Vieira, D. Coronel and R. Filho, 2015. Financial literacy in Southern Brazil: Modeling and invariance between genders. Journal of Behavioral and Experimental Finance, 6: 1-12.https://doi.org/10.1016/j.jbef.2015.03.002 DOI: https://doi.org/10.1016/j.jbef.2015.03.002
- Van Rooij, M., A. Lusardi and R. Alessie, 2007. Financial literacy and stock market participation. NBER Working Paper No. 13565, Cambridge, MA: the National Bureau of Economic Research.https://doi.org/10.3386/w13565 DOI: https://doi.org/10.3386/w13565
- Van Rooij, M., A. Lusardi and R. Alessie, 2009. Financial literacy and retirement planning in the Netherlands. DNB Working Paper No. 231: 1-38.
- Van Rooij, M., A. Lusardi and R. Alessie, 2011. Financial literacy and stock market participation. Journal of Financial Economics, 101(2): 449-472. https://doi.org/10.1016/j.jfineco.2011.03.006 DOI: https://doi.org/10.1016/j.jfineco.2011.03.006
- Watson, J., 2003. Failure rates for female-controlled businesses: Are they any different? Journal of Small Business Management, 41(3): 262-277. https://doi.org/10.1111/1540-627X.00081 DOI: https://doi.org/10.1111/1540-627X.00081
- Yu, K.M., A.M. Wu, W.S. Chan and K.L. Chou, 2015. Gender differences in financial literacy among Hong Kong workers. Educational Gerontology, 41(4): 315-326. https://doi.org/10.1080/03601277.2014.966548 DOI: https://doi.org/10.1080/03601277.2014.966548
- Zikmund, W.G., 2003. Business research methods. Mason, OH: Thomson/South-Western.
References
Agarwalla, S., S. Barua, J. Jacob and J. Varma, 2013. Financial literacy among working young in urban India. IIMA Working Paper No. 2013-10-02: 1-27.https://doi.org/10.2139/ssrn.2338723 DOI: https://doi.org/10.2139/ssrn.2338723
Allgood, S. and W. Walstad, 2013. Financial literacy and credit card behaviours: A cross- sectional analysis by age. Numeracy, 6(2): 1-26.https://doi.org/10.5038/1936-4660.6.2.3 DOI: https://doi.org/10.5038/1936-4660.6.2.3
Atkinson, A. and F.A. Messy, 2012. Measuring financial literacy: Results of the OECD/ international network on financial education (INFE) pilot study. OECD Working Papers on Finance, Insurance and Private Pensions No. 15: 1-73.
Au, Y.H.N. and K.L. Tan, 2018. The influence of financial literacy towards risk tolerance. International Journal of Business and Society, 18(3): 469-484. DOI: https://doi.org/10.33736/ijbs.3139.2017
Baron, R.M. and D.A. Kenny, 1986. The moderator-mediator variable distinction in social psychological research: Conceptual, strategic, and statistical considerations. Journal of Personality and Social Psychology, 51(6): 1173-1182. https://doi.org/10.1037//0022-3514.51.6.1173 DOI: https://doi.org/10.1037/0022-3514.51.6.1173
Bhatt, 2017. Financial literacy: A holistic perspective. Asian Journal of Research in Banking and Finance, 7(6): 127-139.https://doi.org/10.5958/2249-7323.2017.00054.2 DOI: https://doi.org/10.5958/2249-7323.2017.00054.2
Crossman, A., 2017. Understanding purposive sampling - an overview of the method and its application. Thoughtco. Available from https://www.thoughtco.com/purposive-sampling-3026727.
Eagle, A.H. and S. Chaiken, 1993. The psychology of attitude. Orlando, FL: Harcourt Brace Jovanovich.
Eniola, A. and H. Entebang, 2016. Financial literacy and SME firm performance. International Journal of Research Studies in Management, 5(1): 31-43. https://doi.org/10.5861/ijrsm.2015.1304 DOI: https://doi.org/10.5861/ijrsm.2015.1304
Filipiak, U. and Y.M. Walle, 2015. The financial literacy gender gap: A question of nature or nurture? Courant Research Centre: Poverty, Equity and Growth Discussion Paper No. 176.
Firli, A., 2017. Factors that influence financial literacy: A conceptual framework. 1st Annual Applied Science and Engineering Conference, IOP Conference Series: Materials Science and Engineering, 180(1).https://doi.org/10.1088/1757-899X/180/1/012254 DOI: https://doi.org/10.1088/1757-899X/180/1/012254
Greenspan, A., 2002. Financial literacy: A tool for economic progress. Futurist, 36(4): 37-41.
Hair, J.F., R.E. Anderson, R.L. Tatham and C. William, 1998. Multivariate data analysis. Upper Saddle River, NJ: Prentice Hall.
Huston, S.J., 2012. Financial literacy and the cost of borrowing. International Journal of Consumer Studies, 36: 566- 572. https://doi.org/10.1111/j.1470-6431.2012.01122.x DOI: https://doi.org/10.1111/j.1470-6431.2012.01122.x
Jariwala, H.V., 2013. To study the level of financial literacy and its impact on investment decision - an in-depth analysis of investors in Gujarat state. Gujarat: V. M. Patel Institute of Management, Ganpat University, Ganpat Vidyanagar.
Jennifer, C.H.I. and Y.N. Chi, 2018. Profiling saltwater recreational anglers toward the threats of marine environment. International Journal of Management and Sustainability, 7(2): 72-82.https://doi.org/10.18488/journal.11.2018.72.72.82 DOI: https://doi.org/10.18488/journal.11.2018.72.72.82
Khalifa, T.B., 2018. The politics of fear in the US political discourse about migration: An argument-based approach. Humanities and Social Sciences Letters, 6(2): 16-30.https://doi.org/10.18488/journal.73.2018.62.16.30 DOI: https://doi.org/10.18488/journal.73.2018.62.16.30
Khan, S.N. and E.I.E. Ali, 2017. The moderating role of intellectual capital between enterprise risk management and firm performance: A conceptual review. American Journal of Social Sciences and Humanities, 2(1): 9-15.https://doi.org/10.20448/801.21.9.15 DOI: https://doi.org/10.20448/801.21.9.15
Khemili, H. and M. Belloumi, 2018. Cointegration relationship between growth, inequality and poverty in Tunisia. International Journal of Applied Economics, Finance and Accounting, 2(1): 8-18.https://doi.org/10.33094/8.2017.2018.21.8.18 DOI: https://doi.org/10.33094/8.2017.2018.21.8.18
Kimiyaghalam, F., S. Mansori, M. Safari and S. Yap, 2017. Parents' influence on retirement planning in Malaysia. Family and Consumer Sciences Research Journal, 45(3): 315-325.https://doi.org/10.1111/fcsr.12203 DOI: https://doi.org/10.1111/fcsr.12203
Klapper, L. and G.A. Panos, 2011. Financial literacy and retirement planning: The Russian case. Journal of Pension Economics & Finance, 10(4): 599-618. https://doi.org/10.1017/S1474747211000503 DOI: https://doi.org/10.1017/S1474747211000503
Kotzè, L. and A. Smit, 2008. Personal financial literacy and personal debt management: The potential relationships with new venture creation. South African Journal of Entrepreneurship and Small Business Management, 1(1): 35-50. https://doi.org/10.4102/sajesbm.v1i1.11 DOI: https://doi.org/10.4102/sajesbm.v1i1.11
Likitrattanaporn, W., 2018. A study of language learning strategies for practical use through the process of cooperative learning. International Journal of Educational Technology and Learning, 3(1): 35-44.https://doi.org/10.20448/2003.31.35.44 DOI: https://doi.org/10.20448/2003.31.35.44
Lusardi, A., 2008. Financial literacy: An essential tool for informed consumer choice? NBER Working Paper Series Financial, 1(Working Paper 14084): 1-29.https://doi.org/10.3386/w14084 DOI: https://doi.org/10.3386/w14084
Lusardi, A. and O. Mitchell, 2008. Planning and financial literacy: How do women fare? American Economic Review, 98(2): 413-417. https://doi.org/10.1257/aer.98.2.413 DOI: https://doi.org/10.1257/aer.98.2.413
Lusardi, A. and S.M. Olivia, 2011a. The outlook for financial literacy. In Financial Literacy: Implications for Retirement Security and the Financial Marketplace, edited by. O. S. Mitchell and A. Lusardi. Oxford: Oxford University Press. pp: 1-15. https://doi.org/10.1093/acprof:oso/9780199696819.003.0001 DOI: https://doi.org/10.1093/acprof:oso/9780199696819.003.0001
Lusardi, A. and D. Scheresberg, 2013. Financial literacy and high-cost borrowing in the United States. NBER Working Paper, No.18969. The National Bureau of Economic Research, Cambridge, MA.https://doi.org/10.3386/w18969 DOI: https://doi.org/10.3386/w18969
Mandell, L., 2006. Financial literacy: Improving education results of the 2006 national Jump$tart survey. Washington, DC: Jumpstart Coalition.
Ming-Yen, T.W., S.C. Chong and S. Mid Yong, 2013. Exploring the factors influencing credit card spending behavior among Malaysians. International Journal of Bank Marketing, 31(6): 481-500.https://doi.org/10.1108/IJBM-04-2013-0037 DOI: https://doi.org/10.1108/IJBM-04-2013-0037
Mohamad, F.S. and M. MacDonald, 2010. Savings behavior and financial problems among college students: The role of financial literacy in Malaysia. Cross-Cultural Communication, 6(3): 103 - 110.
OECD, 2013. Financial literacy framework. In OECD (Ed.), PISA 2012 Assessment and Analytical Framework: Mathematics, Reading, Science, Problem Solving and Financial Literacy. Paris: OECD Publishing. pp: 139-166.https://doi.org/10.1787/9789264190511-7-en DOI: https://doi.org/10.1787/9789264190511-7-en
OECD, 2014. PISA 2012 technical background. In OECD (Ed.), PISA 2012 Results: Students and Money: Financial Literacy Skills for the 21st Century. Paris: OECD Publishing, 4 :123-145.https://doi.org/10.1787/9789264208094-10-en DOI: https://doi.org/10.1787/9789264208094-10-en
Potrich, A., K. Vieira, D. Coronel and R. Filho, 2015. Financial literacy in Southern Brazil: Modeling and invariance between genders. Journal of Behavioral and Experimental Finance, 6: 1-12.https://doi.org/10.1016/j.jbef.2015.03.002 DOI: https://doi.org/10.1016/j.jbef.2015.03.002
Van Rooij, M., A. Lusardi and R. Alessie, 2007. Financial literacy and stock market participation. NBER Working Paper No. 13565, Cambridge, MA: the National Bureau of Economic Research.https://doi.org/10.3386/w13565 DOI: https://doi.org/10.3386/w13565
Van Rooij, M., A. Lusardi and R. Alessie, 2009. Financial literacy and retirement planning in the Netherlands. DNB Working Paper No. 231: 1-38.
Van Rooij, M., A. Lusardi and R. Alessie, 2011. Financial literacy and stock market participation. Journal of Financial Economics, 101(2): 449-472. https://doi.org/10.1016/j.jfineco.2011.03.006 DOI: https://doi.org/10.1016/j.jfineco.2011.03.006
Watson, J., 2003. Failure rates for female-controlled businesses: Are they any different? Journal of Small Business Management, 41(3): 262-277. https://doi.org/10.1111/1540-627X.00081 DOI: https://doi.org/10.1111/1540-627X.00081
Yu, K.M., A.M. Wu, W.S. Chan and K.L. Chou, 2015. Gender differences in financial literacy among Hong Kong workers. Educational Gerontology, 41(4): 315-326. https://doi.org/10.1080/03601277.2014.966548 DOI: https://doi.org/10.1080/03601277.2014.966548
Zikmund, W.G., 2003. Business research methods. Mason, OH: Thomson/South-Western.