Financial Literacy & Financial Performance of Art and Craft Business in Kenya

Abstract

Financial literacy plays a critical role in influencing the positive financial behaviors' and member participation in pension schemes in addition to reducing debt loads, knowledge gains and accumulating wealth and managing it effectively. In developing countries like Kenya, the informal markets dominate the economic scene, yet rarely do the self-employed receive any formal training or financial literacy programmes to assist them on how to run their businesses in order to build knowledge and capacity, as well as to minimize failure in running a business. The study sought to establish the effect of financial literacy on the financial performance of soapstone business in Kisii County (Kenya). The study found that financial literacy training helped entrepreneurs improve on investment decision making process by the entrepreneurs, and that through venture financing training, entrepreneurs were able to obtain financing for their business which helped in positively influencing the financial performance of business. The study further established that training on financing decision helped the entrepreneurs to make both investment and financing decisions-financing from cheap source with favorable repayment term. The study concludes that financial management training, venture financing training, and financial decisions training had a positive effect on financial performance of soapstone business in Kenya.