Necessity entrepreneurship, financial literacy and business performance: evidence from an international survey

Melanie Koch () and Marco Langiulli ()
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Melanie Koch: Oesterreichische Nationalbank
Marco Langiulli: Bank of Italy

No 936, Questioni di Economia e Finanza (Occasional Papers) from Bank of Italy, Economic Research and International Relations Area

Abstract: While opportunity entrepreneurs open a business because they see an opportunity, necessity entrepreneurs struggle to find another way to earn (enough) money. Using novel survey data from four different countries, we explore the differences in financial literacy and business performance between necessity and opportunity entrepreneurs. The survey allows us to construct a broad measure of financial literacy relating to the business realm. We find that necessity entrepreneurs have a significantly lower level of financial literacy in all countries. Decomposition techniques show that these differences can hardly be explained by differences in age, gender or education. Necessity businesses also weathered the COVID-19 pandemic worse than opportunity businesses did. In most countries, the financial literacy gap is related to this difference in business performance.

Keywords: financial literacy; financial education; entrepreneurship; micro entrepreneurs (search for similar items in EconPapers)
JEL-codes: D22 G53 L26 M21 (search for similar items in EconPapers)
Date: 2025-06
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