Financial literacy, financial capabilities, and sustainable business model practice among small business owners in Nigeria

ABSTRACT

The study investigates how financial literacy and financial capabilities influence small firms’ sustainability in Lagos and Ogun States, Nigeria. It employs a survey research design to collect data from 300 small business owners across the two States. Data collected were analysed using Structural Equation Modelling (SEM) technique. The study shows that environmental sustainability, financial sustainability and social responsibility are significant determinants of small firms’ sustainability in Nigeria. Financial literacy and financial capabilities practices also have a significant positive impact on firm sustainability. However, the use of savings product shows a significant adverse effect on firms’ sustainability. The findings imply that financial literacy knowledge and practice in small business operations enhance firms’ sustainability. The study recommends that small firms should incorporate sustainability models into their business operations and improve their financial knowledge to maintain sustainability. Small business owners should also invest their savings in an appropriate investment product that suits their risk tolerance.

KEYWORDS:

• Environmental sustainability
• financial capabilities
• financial literacy
• small firm corporate sustainability
• social responsibility and inclusion

JEL Classification:

• E44
• L121

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1 Sustainable business model is also referred to as corporate sustainability in this study, for sake of clarity.

Additional information

Funding

This work was supported by the Covenant University Centre for Research, Innovation and Discovery and Zenith Bank.