Financial Literacy and Access to Finance among Small Business Owners in Ghana

Abstract

This study examines the relationship between financial literacy and access to finance among small business owners in Ghana. Financial literacy was measured through items on budgeting, cash-flow management, interest, financial statements, borrowing costs, insurance and investment risk. A simulated dataset of 242 small businesses was analysed using descriptive statistics, correlation, multiple regression and binary logistic regression. The results indicate moderate financial literacy, with stronger knowledge of budgeting and cash-flow management than insurance and borrowing-cost calculations. Financial literacy significantly predicted access to finance after controlling for business age, size, registration, owner education and financial record-keeping (β = .431, p < .001). Among loan applicants, a one-unit increase in financial literacy more than doubled the odds of approval (OR = 2.203, p < .001). Financial records and collateral also improved approval prospects, while high interest rates and complex documentation remained barriers. The study shows that financial education should be combined with record-keeping support and more accessible lending procedures. Given the cross-sectional design, limited national representativeness and reliance on self-reported financing outcomes, the findings should be interpreted cautiously, and future research should use longitudinal data and lender records while examining regional and sectoral differences.