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Financial knowledge and financial behaviour among micro businesses: the mediating role of pro-growth mental accounting

Author

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  • Wirawan E.D. Radianto
  • Tommy C. Efrata
  • Liliana Dewi

Abstract

This study examines the effect of financial knowledge, pro-growth mental accounting, and financial self-efficacy on financial behaviour. A model is developed to solve research gaps regarding the relationship between financial knowledge and financial behaviour, which has been inconsistent and weak. The number of respondents is 314 micro businesses and the data analysis method used is structural equation method. The finding of this study is that pro-growth mental accounting has a greater effect than financial self-efficacy on financial behaviour. The pro-growth mental accounting mindset makes micro businesses manage their finances more carefully. Another finding is that pro-growth mental accounting encourages the creation of reserve funds while increasing the chances of achieving its financial goals. Micro businesses whose financial management is simple have a greater chance of having financial resilience in the future.

Suggested Citation

  • Wirawan E.D. Radianto & Tommy C. Efrata & Liliana Dewi, 2024. "Financial knowledge and financial behaviour among micro businesses: the mediating role of pro-growth mental accounting," International Journal of Economics and Business Research, Inderscience Enterprises Ltd, vol. 28(2), pages 135-152.
    • Handle: RePEc:ids:ijecbr:v:28:y:2024:i:2:p:135-152
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