Title: Financial literacy, value creation and firm performance: an investigation of Italian small and medium enterprises

Authors: Andrea Quintiliani; Michele Modina; Massimo Arnone

Addresses: Department of Law and Economic Sciences, Pegaso University, Centro Direzionale, Isola F2, Naples, 80143, Italy ' Department of Economics, University of Molise, Via Francesco De Sanctis, Campobasso, 86100, Italy ' Department of Economics, University of Messina, Piazza Pugliatti, Messina, 98122, Italy

Abstract: This article aims to determine the influence of entrepreneurs' financial literacy for the growth of SMEs' value. The paper verifies the hypothesis that there is a significant relationship between financial literacy and value creation, as indicated by economic value added (EVA^®). The study analyses 162 Italian SMEs operating in the textile and clothing sector. The analysis period is between 2011 and 2013. Regression analysis and correlation analysis have been applied to test the hypotheses. The results suggest a positive and significant relationship between financial literacy and the variables that drive the value creation. Greater financial literacy allows SMEs to optimise their capital structure and select the most profitable projects. This work is useful to stimulate debate on the role of financial education in mitigating the difficulties of small and medium entrepreneurs in achieving value creation goals and in enabling policy makers to identify gaps and design appropriate responses.

Keywords: financial literacy; financial education; small and medium-sized enterprises; SMEs; entrepreneurship; firm performance; value creation; economic value added.

DOI: 10.1504/IJESB.2023.131617

International Journal of Entrepreneurship and Small Business, 2023 Vol.49 No.1, pp.63 - 86

Received: 04 Oct 2019
Accepted: 02 Mar 2020
Published online: 21 Jun 2023 *

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