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Attitude for inclusive finance: influence of owner-managers’ and firms’ characteristics on SMEs financial decision making

Author

Listed:
  • Rabia Rasheed
  • Sulaman Hafeez Siddiqui

Abstract

Purpose - The adoption and use of financial services by small- and medium-sized enterprises (SMEs) are pivotal in the development of inclusive financial markets. The purpose of this paper is to examine the influence of attitude on financial decision making of SMEs owner-manager. The attitude of SMEs owner-manager comprises of several factors; however, current study identifies few critical factors such as motivation, awareness and risk in the context of Pakistan. The study also includes the personal and firm characteristics as moderating variables to examine their effect on the relationship between attitude and financial decision making of owner-managers. Design/methodology/approach - With the help of a structured questionnaire, total 285 valid responses are analyzed to accomplish the research objectives. The study uses SPSS and partial least square-structural equation modeling techniques in order to conduct analysis. The results of study highlight the importance of attitudinal factors such as awareness and risk. Moreover, the moderating effect of personal characteristics on the relationship between attitude and financial decision making has been found strong instead of firm characteristics. Findings - The results show that the low awareness level of owner-managers regarding financial products and procedures significantly affects their attitude. Moreover, the less knowledge of financing terms as well as dominant role of owner-managers in taking firm decisions also increase the negative effect of risk factor on SMEs owner-manager attitude. Research limitations/implications - The study suggested that policy makers should focus on the financial awareness of SMEs owner-manager to reduce the negativity of risk factor. Originality/value - The study contributes toward the literature of inclusive finance and sustainability studies through better understanding of financial decision making of SMEs in emerging economies.

Suggested Citation

  • Rabia Rasheed & Sulaman Hafeez Siddiqui, 2018. "Attitude for inclusive finance: influence of owner-managers’ and firms’ characteristics on SMEs financial decision making," Journal of Economic and Administrative Sciences, Emerald Group Publishing Limited, vol. 35(3), pages 158-171, December.
    • Handle: RePEc:eme:jeaspp:jeas-05-2018-0057
    DOI: 10.1108/JEAS-05-2018-0057
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    Cited by:

    1. Muhammad Zeeshan Shaukat & Sheikh Usman Yousaf & Usman Sarwar & Sonia Sattar, 2024. "Thriving in Turmoil: Unraveling the Interplay of Resources, Resilience, and Performance among SMEs in Times of Economic Vulnerability," Bulletin of Business and Economics (BBE), Research Foundation for Humanity (RFH), vol. 13(2), pages 164-173.

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