Financial Literacy and Performance of Small and Medium-Scale Enterprises in Ghana: Exploring the Interplay of Financial Risk Attitude and Access to Finance

This paper explores the empirical relationship between financial literacy and SME performance, alongside the interactions with access to finance, and how financial risk attitude influences the financial performance of SMEs in Ghana within a PLS-SEM analytical framework. Based on a sample of 392 SMEs, the results reveal a robust positive relationship between financial literacy and the financial performance of SMEs, implying that financial literacy is a necessary condition for the performance of SMEs, although this relationship is statistically weak with reference to access to credit. Similarly, financial risk attitudes directly impact SMEs' financial performance. The paper, thus, contributes to empirical knowledge by revealing the critical role of financial literacy and financial risk in enhancing SMEs' financial performance in contemporary Ghana. The paper recommends that SME managers should proactively seek opportunities to improve their financial knowledge and skills, which could enhance their attitude towards risk-taking behaviour and ultimately have a positive impact on SME performance.