Exploring the Effects of Financial Knowledge on Better Decision-Making in SMEs

Vicente González-Prida (), Diana Pariona-Amaya, Juan Manuel Sánchez-Soto, Sonia Luz Barzola-Inga, Uldarico Aguado-Riveros, Fabricio Miguel Moreno-Menéndez and Mark David Villar-Aranda
Additional contact information
Vicente González-Prida: Department of Industrial Management I, University of Seville, 41092 Seville, Spain
Diana Pariona-Amaya: Faculty of Administrative and Accounting Sciences, Peruvian University of Los Andes, Huancayo 12000, Peru
Juan Manuel Sánchez-Soto: Faculty of Administrative and Accounting Sciences, Peruvian University of Los Andes, Huancayo 12000, Peru
Sonia Luz Barzola-Inga: Faculty of Administrative and Accounting Sciences, Peruvian University of Los Andes, Huancayo 12000, Peru
Uldarico Aguado-Riveros: Faculty of Administrative and Accounting Sciences, Peruvian University of Los Andes, Huancayo 12000, Peru
Fabricio Miguel Moreno-Menéndez: Faculty of Administrative and Accounting Sciences, Peruvian University of Los Andes, Huancayo 12000, Peru
Mark David Villar-Aranda: Faculty of Administrative and Accounting Sciences, Peruvian University of Los Andes, Huancayo 12000, Peru

Administrative Sciences, 2025, vol. 15, issue 1, 1-25

Abstract: The knowledge on financial management highly matters as it assists the micro-entrepreneurs in the making of right and sustainable business decisions. This research seeks to examine the effects of financial literacy on microenterprise decision-making in order to improve rational decision-making in financial management. A structured questionnaire with Likert-scaled options was used to measure micro-entrepreneurs’ financial decision-making capacity in terms of information processing and decision-making. They demonstrate a favorable relationship between financial education and rationality, which refers to micro-entrepreneurs’ capacity to select from a range of acceptable options. Based on the findings presented in this research, it is suggested that greater efforts should be paid to the integration of financial literacy within any form of entrepreneurial training targeting improvement in sustainability dimensions and qualities of decisions made by micro-entrepreneurs. Through increased financial knowledge, micro-entrepreneurs can manage financial problems effectively and thereby support the growth of sustainable microenterprises. Moreover, such observations suggest that all future policies must focus on and incorporate financial literacy as the defining strategy towards the improvement of the microenterprise sector and, therefore, economic growth.

Keywords: decision making; financial education; micro-entrepreneurs; rational decisions; small and medium enterprises (SME); sustainability; sustainable development (search for similar items in EconPapers)
JEL-codes: L M M0 M1 M10 M11 M12 M14 M15 M16 (search for similar items in EconPapers)
Date: 2025
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.mdpi.com/2076-3387/15/1/24/pdf (application/pdf)
https://www.mdpi.com/2076-3387/15/1/24/ (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:gam:jadmsc:v:15:y:2025:i:1:p:24-:d:1565057

Access Statistics for this article

Administrative Sciences is currently edited by Ms. Nancy Ma

More articles in Administrative Sciences from MDPI
Bibliographic data for series maintained by MDPI Indexing Manager ().