Abstract:
The purpose of this study is to investigate the effect of financial literacy on the performance of Small and Medium Enterprises (SMEs) in Sri Lanka. The study assessed the financial literacy of SME owners and its impact on SMEs’ performance in Sri Lanka, especially in the Vavuniya district. A questionnaire survey was administered among fifty respondents in the Vavuniya district. The study analyzed the SME owners' financial literacy namely, financial behavior, financial attitude, and financial knowledge are how to impact on of their firm performance. Collected data were described by frequency, percentage, factor analysis, and correlation and regression analysis. The results show that financial knowledge, and financial behavior impact positively the firm performance. The findings will give practical implications for the government and other respective institutions and SME owners by highlighting the importance of facilitating SME owners’ adequate financial education and training with the expectation of improving SMEs’ performance and leading the country to move toward sustainable development.
