Financial Literacy and the Survival of Microenterprises

Marco Trombetta

Financial Literacy and the Survival of Microenterprises

Author(s)	Marco Trombetta
Country	United States
Abstract	Microenterprises play a significant role in employment generation, local economic activity, and income creation, particularly within developing and emerging markets. However, many small-scale businesses face challenges related to financial management, resource allocation, cash flow control, and long-term sustainability. Financial literacy has emerged as an important capability that enables microenterprise owners to make informed financial decisions, manage business risks, and improve enterprise survival prospects. This study examines the relationship between financial literacy and the survival of microenterprises by analysing key dimensions including financial knowledge, budgeting capability, access to financial information, and risk management practices. The research adopts a simulation-based analytical framework to explore how financial literacy influences the sustainability and continuity of microenterprises. A conceptual model was developed in which financial literacy dimensions represent influencing factors and enterprise survival represents the outcome variable. Simulated analytical values are used to demonstrate quantitative evaluation procedures and interpret possible relationships between financial capabilities and business performance outcomes. The findings indicate that budgeting skills, financial decision-making ability, and risk management awareness demonstrate strong influence on microenterprise survival. Entrepreneurs with better financial understanding are more likely to maintain effective cash flow management, control operational expenses, and respond effectively to financial uncertainties. The study highlights that financial literacy should be considered a strategic capability rather than only an individual skill. The research contributes to small business and entrepreneurship literature by explaining the importance of financial knowledge in improving microenterprise resilience. The findings provide practical implications for policymakers, financial institutions, and entrepreneurship development organizations seeking to strengthen small business sustainability through financial education initiatives.
Keywords	Financial Literacy, Microenterprises, Business Survival, Financial Management, Entrepreneurship Development, Small Business Sustainability, Risk Management, Entrepreneurial Capability.
Field	Engineering
Published In	Volume 2, Issue 3, May-June 2020
Published On	2020-05-25

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Financial Literacy and the Survival of Microenterprises

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