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The moderating influence of financial literacy on the relationship between access to finance and firm growth in Ghana

Published on Jan 2, 2016in Venture Capital: An International Journal of Entrepreneurial Finance
· DOI :10.1080/13691066.2015.1079952
Samuel Adomako6
Estimated H-index: 6
(Warw.: University of Warwick),
Albert Danso6
Estimated H-index: 6
(Ebor: University of York),
John Ofori Damoah3
Estimated H-index: 3
(Central University College)
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Abstract
The literature on access to finance has confirmed a positive relationship between access to finance and firm growth. Yet the boundary conditions for such linkage are less examined in the context of developing economies. This study draws on resource-based view to introduce financial literacy as a moderator of the relationship between access to finance and firm growth. This theoretically derived research model is empirically tested using survey data from 201 small and medium-sized enterprises in Ghana. Our empirical findings suggest that financial literacy positively enhances the access to finance-firm growth relationship.
  • References (77)
  • Citations (10)
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References77
Newest
Published on Aug 1, 2015in International Small Business Journal3.71
Marc Cowling22
Estimated H-index: 22
(University of Brighton),
Weixi Liu5
Estimated H-index: 5
(University of Bath)
+ 1 AuthorsNing Zhang3
Estimated H-index: 3
(University of Liverpool)
This article uses UK data to consider how small and medium-sized enterprises (SMEs)1 coped during the recent financial crisis. This is important, as SMEs are major contributors to job creation, but are vulnerable to falling demand. It finds that 4 in 10 SMEs experienced a fall in employment during the recession, and 5 in 10 experienced a fall in sales. Within 12 months of the recession, three-quarters of entrepreneurs had a desire to grow. This suggests that while the immediate effects of recess...
Published on Mar 15, 2015in Journal of Social Service Research0.78
Catherine M. Reich7
Estimated H-index: 7
(U of M: University of Memphis),
Jeffrey S. Berman13
Estimated H-index: 13
(U of M: University of Memphis)
ABSTRACTAlthough programs designed to increase financial literacy are widely promoted, there is little evidence of their impact on financial knowledge or behavior. The present study used an experimental design to examine the effectiveness of a financial literacy course for low-income individuals receiving services in a nonprofit residential program. Participants were randomly assigned either to a 4-week financial literacy course (n = 17) or a wait-list control group (n = 16). They then completed...
Published on Feb 1, 2015in International Small Business Journal3.71
Stuart Fraser10
Estimated H-index: 10
(Warw.: University of Warwick),
Sumon Kumar Bhaumik19
Estimated H-index: 19
(University of Sheffield),
Mike Wright97
Estimated H-index: 97
(Imperial College London)
This article explores what we do (and do not) know about entrepreneurial finance and its relationship with growth. Broadly, there is a need for research to go beyond traditional supply side/market failure issues to better understand the role of entrepreneurial cognition, objectives, ownership types and firm life-cycle stages in financing/investment decisions. We show that little is known about the pivotal relationship between access to external finance and growth due to limitations in current ap...
Evan J. Douglas16
Estimated H-index: 16
(Griffith University),
Martin Carlsson-Wall5
Estimated H-index: 5
(HHS: Stockholm School of Economics),
Tomas Hjelström2
Estimated H-index: 2
(HHS: Stockholm School of Economics)
The valuation of entrepreneurial start-ups for the purpose of equity allocation to business angel investors is an enduring point of discord between the contracting parties. Lack of information and lack of trust, plus the asymmetry of both information and trust between the parties, typically cause the investor to apply a higher risk premium and argue for a larger share of the firm's equity than the entrepreneur deems reasonable. Recent literature on interpersonal trust and the inclusion of manage...
Published on Oct 1, 2014in Research Policy5.42
Andreas Engelen21
Estimated H-index: 21
(Technical University of Dortmund),
Harald Kube1
Estimated H-index: 1
(Technical University of Dortmund)
+ 1 AuthorsTessa Christina Flatten12
Estimated H-index: 12
(RWTH Aachen University)
The literature on entrepreneurial orientation (EO) has confirmed the positive relationship between EO and firm performance and that relationship's dependence on several contingencies. The present study connects the resource-based view and its dynamic capability extension to introduce absorptive capacity (ACAP) as a moderator of the relationship between EO and firm performance. This theoretically derived research model is empirically validated using survey data from 219 small and medium-sized ent...
Samuel Adomako6
Estimated H-index: 6
(Warw.: University of Warwick),
Albert Danso6
Estimated H-index: 6
Purpose – Regulatory environment, environmental dynamism, and political ties are typically modelled as separate antecedents of firm performance. However, the boundary conditions for such models are less examined in a developing country context where regulatory environments have been argued to be weak. Accordingly, drawing on institutional and social capital theories, the purpose of this paper is to examine the interrelationship between regulatory environment, political ties, environmental dynami...
Published on Apr 1, 2014in American Economic Journal: Applied Economics4.30
Alejandro Drexler3
Estimated H-index: 3
,
Gregory Fischer8
Estimated H-index: 8
(LSE: London School of Economics and Political Science),
Antoinette Schoar27
Estimated H-index: 27
(MIT: Massachusetts Institute of Technology)
Individuals and business owners engage in an increasingly complex array of financial decisions that are critical for their success and well-being. Yet a growing literature documents that in both developed and developing countries, a large fraction of the population is unprepared to make these decisions. Evidence on potential remedies is limited and mixed. Two randomized trials test the impact of financial training on firm-level and individual outcomes for microentrepreneurs in the Dominican Repu...
Published on Mar 20, 2014in Oecd Journal: Financial Market Trends
Gert Wehinger7
Estimated H-index: 7
After a brief overview of current financing difficulties for SMEs and policy measures to support SME lending during the crisis,this article presents a literature review related to difficulties in SME’s access to finance during the crisis, against a background of a sharp decline in bank profitability and an erosion of bank capital that negatively affected lending. The articles reviewed are classified according to four main issues of interest:the impairment of the bank-credit channel and its econo...
Dan K. Hsu7
Estimated H-index: 7
(ASU: Appalachian State University),
J. Michael Haynie19
Estimated H-index: 19
(SU: Syracuse University)
+ 1 AuthorsAlexander McKelvie18
Estimated H-index: 18
(SU: Syracuse University)
Prior studies have examined the importance of economic, strategic, and human factors to decision policies of angel investors and venture capitalists. As more angels professionalize into angel funds and as markets for technologies and ideas become more competitive, it is becoming more important to compare their decision policies with those of venture capitalists. Drawing upon agency theory, we examine whether economic potential, specific human capital, strategic readiness, and passion matter diff...
Published on Jan 1, 2014in Numeracy
Pearl Dahmen1
Estimated H-index: 1
(USF: University of South Florida),
Eileen Rodríguez1
Estimated H-index: 1
(USF: University of South Florida)
Small business is the backbone of the U.S. economy; when the financial literacy skills of entrepreneurs fall short of those needed to operate a successful business, it is more than the individual business at risk. In 2012, 14 small businesses requesting growth-acceleration consulting services from the Florida Small Business Development Center at the University of South Florida were assessed financially as part of the service provided by the Center. Financial ratios were used to analyze the busin...
Cited By10
Newest
Purpose The international community recognizes the role of entrepreneurship education in fostering economic growth and sustainable development. However, preparing the next generation of entrepreneurs is not an easy task, since today’s complexity requires the creation of skills and capabilities for which the traditional programs reveal their inadequacy. Some scholars remark how entrepreneurship education and entrepreneurial intention are not necessarily related and, in line with policy makers’ co...
Published on Jan 1, 2019in Sustainability2.59
Role of the knowledge-based resources in promoting sustainability in small and medium enterprises (SMEs) is currently a topic of debate. Financial literacy has been identified as a vital knowledge resource for financial decision making, but insufficient attention has been given to how SMEs’ financial literacy affects their sustainability. Drawing upon a knowledge-based perspective, peaking order theory and dual process theory, we constructed an integrated model to examine the impact of financial...
Published on Jan 19, 2019in Sustainability2.59
Qianwei Ying1
Estimated H-index: 1
,
Hazrat Hassan1
Estimated H-index: 1
,
Habib Ahmad1
Estimated H-index: 1
The answer to the challenging question, “Should one either invest in tangible resources or intangible resources/capabilities?” is still fragmented. In prior studies, more emphasis is given to tangible resources, while intangible resources have comparatively received minor attention, despite their significant role in the success of small and medium enterprises (SMEs). Particularly the role of the intangible skills; intellectual capital, financial literacy (FL), and business experience (BE) in res...
Boyke R. Purnomo1
Estimated H-index: 1
(UGM: Gadjah Mada University)
Purpose This study aims to examine the relationship between artistic orientation and entrepreneurial performance and how other central entrepreneurial resources, namely, entrepreneurial orientation and financial literacy, affect this relationship. Design/methodology/approach Regulatory focus theory was used to develop the model. A survey of 375 small creative business entrepreneurs was conducted in Yogyakarta, Indonesia, and a hierarchical linear regression was used for data analysis. Findings T...
Javed G. Hussain10
Estimated H-index: 10
(BCU: Birmingham City University),
Samuel Salia1
Estimated H-index: 1
(University of Wolverhampton),
Amin Karim1
Estimated H-index: 1
(University of Ghana)
Purpose The purpose of this paper is to examine the relationship between financial literacy, access to finance and growth among small- and medium-sized enterprises (SMEs) within the Midlands region of the UK. It assesses whether financial literacy assists SMEs to overcome information asymmetry, mitigates the need for collateral, optimizes capital structure and improves access to finance. Design/methodology/approach To gain a deeper insight into the complex relationship between financial literacy...
Published on Jul 3, 2018in Journal of African Business
Joshua Abor23
Estimated H-index: 23
(University of Ghana),
Mohammed Amidu10
Estimated H-index: 10
(University of Ghana),
Haruna Issahaku6
Estimated H-index: 6
(University for Development Studies)
ABSTRACTThe paper employs the multipurpose nature of mobile telephony to investigate its welfare implications using a large sample of households in Ghana. We use seemingly unrelated probit and instrumental variable procedure to test for two related issues: First, we investigate whether mobile telephony promotes pro-poor development by helping households to efficiently allocate consumption and navigate out of poverty. Second, we analyze whether access to a broad array of financial services enhanc...
Published on Nov 6, 2017
George Okello Candiya Bongomin3
Estimated H-index: 3
,
Joseph Mpeera Ntayi13
Estimated H-index: 13
+ 1 AuthorsCharles Akol Malinga2
Estimated H-index: 2
Purpose The purpose of this paper is to establish the moderating effect of financial literacy in the relationship between access to finance and growth of small and medium enterprises (SMEs) in developing economies. Thus, this study seeks to establish whether financial literacy moderates the relationship between access to finance and growth of SMEs in a developing economy like Uganda. Design/methodology/approach Cross-sectional research design was used in the study and data were collected from 16...
Published on Jul 1, 2017in Long Range Planning3.36
Tahiru Azaaviele Liedong4
Estimated H-index: 4
(University of Bath),
Tazeeb Rajwani11
Estimated H-index: 11
(University of Essex)
In this study, we draw upon insights from agency theory to examine the impact of managerial political ties on cost of debt and also to explore whether corporate governance mediates this impact. We hypothesize that political ties reduce financial reporting quality, disclosure of non-financial information and board independence, and are therefore associated with higher interest rates. We also hypothesize that the negative effect of political ties on the cost of debt will be stronger if firms borro...
Patient Rambe9
Estimated H-index: 9
(Central University of Technology),
L. Mosweunyane1
Estimated H-index: 1
(Central University of Technology)
Despite the South African government’s strategic policy interventions and huge investments into small business development over the past two decades, solid evidence of the transition of informal businesses to the formal sector is hard to encounter. Furthermore, the high rates of unemployment in the country point to the growing incapacity of small-scale, micro and medium enterprises (SMMEs) to address the chronic social ills of poverty, inequality and social deprivation ravaging the country. Buil...