The Determinants of Financial Literacy Among Micro, Small, and Medium-Sized Enterprise (MSMEs) In Bangladesh And Malaysia

Abstract

Micro, small, and medium-sized enterprises (MSMEs) play an essential role in many countries' economic and social development. This sector, in particular, generates new job opportunities, encourages competition, and, as a result, boosts productivity. MSMEs' long-term viability is crucial. MSMEs often fail during the first five years of their existence. Poor money management is one of the reasons for this failure, primarily related to a lack of financial literacy. Financial literacy is also challenging regarding human resources' ability to accept funding from financial institutions. Consequently, this paper examines the extent of financial literacy among Grameen Bank and AIM MSMEs in six divisions throughout Bangladesh and Malaysia. A standardised questionnaire was used to collect data from 402 AIM and Grameen Bank MSMEs. The level of financial literacy among Grameen Bank and AIM MSMEs operators is investigated using descriptive and inferential analysis. As a result of the findings, structural equation modelling was used to determine how the components are linked, which significantly impacts financial literacy. According to the study, knowledge, socialisation, agents, attitude, awareness, and skills are significant predictors of financial literacy among AIM and Grameen Bank MSMEs operators in Bangladesh and Malaysia. Policymakers should consider how the characteristics and financial literacy skills of MSMEs affect their behaviour and actions in micro-entrepreneurship when they make decisions about how to help MSMEs get more money. This is particularly evident in Malaysia and Bangladesh.

Full text

Journal of Entrepreneurship Education Volume 26, Special Issue 1, 2023
1 1528-2651-26-S1-002
Citation Information: Nazim, U.M., Nahar, L., Rahman, M.M., & Saad, N.B. (2023). The Determinants of Financial Literacy Among
Micro, Small, and Medium-Sized Enterprise (Msmes) In Bangladesh And Malaysia. Journal of
Entrepreneurship Education, 26(S1),1-13.
THE DETERMINANTS OF FINANCIAL LITERACY
AMONG MICRO, SMALL, AND MEDIUM-SIZED
ENTERPRISE (MSMES) IN BANGLADESH AND
MALAYSIA
Mohammad Nazim Uddin, Ankara University
Lutfun Nahar, Istanbul University
Mohammad Mizanur Rahman, International Islamic University
Norma BT Saad, International Islamic University
ABSTRACT
Micro, small, and medium-sized enterprises (MSMEs) play an essential role in many
countries' economic and social development. This sector, in particular, generates new job
opportunities, encourages competition, and, as a result, boosts productivity. MSMEs' long-term
viability is crucial. MSMEs often fail during the first five years of their existence. Poor money
management is one of the reasons for this failure, primarily related to a lack of financial
literacy. Financial literacy is also challenging regarding human resources' ability to accept
funding from financial institutions. Consequently, this paper examines the extent of financial
literacy among Grameen Bank and AIM MSMEs in six divisions throughout Bangladesh and
Malaysia. A standardised questionnaire was used to collect data from 402 AIM and Grameen
Bank MSMEs. The level of financial literacy among Grameen Bank and AIM MSMEs operators
is investigated using descriptive and inferential analysis. As a result of the findings, structural
equation modelling was used to determine how the components are linked, which significantly
impacts financial literacy. According to the study, knowledge, socialisation, agents, attitude,
awareness, and skills are significant predictors of financial literacy among AIM and Grameen
Bank MSMEs operators in Bangladesh and Malaysia. Policymakers should consider how the
characteristics and financial literacy skills of MSMEs affect their behaviour and actions in
micro-entrepreneurship when they make decisions about how to help MSMEs get more money.
This is particularly evident in Malaysia and Bangladesh.
Keywords: MSMEs, Knowledge, Skill, Attitude, Behaviours, Entrepreneurs, Financial Literacy.
INTRODUCTION
Numerous researches has examined the significance of financial literacy. Brochado &
Mendes (2021) offered the most convincing evidence that the level of financial literacy directly
impacts the success or failure of the business community. Furthermore, financial literacy may
significantly impact an entrepreneur's ability to succeed. According to Anshika & Singla (2022),
the capacity to make sound financial decisions, such as choosing which financial products and
instruments to use, is an important part of this job description.
SMEs' lack of financial literacy might partly be explained by their difficulties in
obtaining traditional bank loans. This implies that several financial institutions' products are still
proving challenging for micro-enterprises to use. Small and medium-sized enterprises (SMEs)
choose quick and easy funding; especially free funding, above worrying about the cost of

Journal of Entrepreneurship Education Volume 26, Special Issue 1, 2023
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Citation Information: Nazim, U.M., Nahar, L., Rahman, M.M., & Saad, N.B. (2023). The Determinants of Financial Literacy Among
Micro, Small, and Medium-Sized Enterprise (Msmes) In Bangladesh And Malaysia. Journal of
Entrepreneurship Education, 26(S1),1-13.
borrowing (Rao et al., 2021). Furthermore, micro-enterprise owners will rely on the
government's handouts and avoid traditional financing because of its high costs and hassles.
Financial tools might help all MSMEs grow their businesses in the future. Financial literacy may
be improved by measuring the difficulty of using financial instruments.
Regarding the significance of financial literacy, we have established that financial
literacy substantially impacts company performance and entrepreneurial abilities (Ozili, 2021;
Molina-García et al., 2022). The capacity of MSMEs to access formal financial instruments can
significantly increase their productivity compared to getting a package of free money or a grant
from governments or other social organisations (Sahadeo, 2018). As a result, small business
owners who lack basic literacy skills may encounter difficulties as they try to grow their
operations. As a result, micro-enterprises prospects for survival and growth are bright if they can
grasp the basics of financial instruments.
An additional benefit of financial literacy is that it is a critical component in formulating
a financial strategy. According to Abdullah & Anderson (2015) financial literacy, namely one's
perception of financial products, significantly impacts one's ability to make sound financial
decisions. As a result, if MSMEs don't fully comprehend the financial instruments, they won't
utilise them. Since many MSMEs are still uneducated in finance, they are persuaded to use
traditional financing because of this lack of knowledge.
In terms of the causes of the amount of financial literacy, a lack of financial literacy leads
to financial exclusion, a situation in which individuals cannot find and utilise financial products
and services that meet their needs and expectations (LeBaron & Kelly, 2021). The common
reasons for economic exemption have remained societal, source, and demand factors.
One of the most critical components of financial literacy is the ability to budget
effectively. According to Garg & Singh (2018) budgeting mechanisms, mainly capital budgeting
carried out by MSMEs, may influence financial literacy. A financial record should be added to
the list as a second must-have. As the drawbacks of microbusiness financial behaviour, financial
records, savings, financing, and budgeting that MSMEs face may be used to gauge financial
literacy (Graña-Alvarez et al., 2022). A lack of knowledge about various financial loans and
instruments, inadequate record-keeping methods, poor cash management, inappropriate saving
habits, and a lack of financial literacy are all disadvantages of small business financial behaviour.
The main objective of this study is to assess the level of financial literacy among
MSMEs, and the specific objectives of this study are as follows: To Identify the effect of
knowledge on the financial literacy of MSMEs in Bangladesh and Malaysia. To identify the
effect of skill on the financial literacy of MSMEs in Bangladesh and Malaysia. To identify the
effect of attitudes toward financial literacy of MSMEs in Bangladesh and Malaysia. To identify
the effect of behaviour on the financial literacy of MSMEs in Bangladesh and Malaysia. To
recommend possible solutions that could enhance financial literacy amongst MSMEs in
Bangladesh and Malaysia
Previous researchers such as Calcagno et al (2020); Goyal & Kumar (2021); Sevriana et
al (2022) have used knowledge and skills, as well as behaviour, as measures of financial literacy
to explain how people get access to financial services like savings accounts and credit cards and
mortgages. On the other hand, these studies fail to consider the importance of financial literacy
in everyday life. The authors fail to separate financial literacy's functional and non-functional
components (knowledge and skills) in explaining financial inclusion. In support of this, it argues
that the focus of research on financial literacy has shifted from information and comprehension
to the development of financial skills, competencies, attitudes, and behaviour (Sugiarto et al.,

Journal of Entrepreneurship Education Volume 26, Special Issue 1, 2023
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Citation Information: Nazim, U.M., Nahar, L., Rahman, M.M., & Saad, N.B. (2023). The Determinants of Financial Literacy Among
Micro, Small, and Medium-Sized Enterprise (Msmes) In Bangladesh And Malaysia. Journal of
Entrepreneurship Education, 26(S1),1-13.
2022). It should be noted that research on financial literacy has relied on subjective
measurements of the concept rather than relying on traditional procedures for obtaining
objective, dependable, and unidimensional measures (Widyastuti & Hermanto, 2022).
Consequently, the study's primary goal is to assess the influence of financial literacy components
on MSMEs' financial literacy in Bangladesh and Malaysia.
LITERATURE REVIEW
Financial literacy is multidimensional it varies things to different individuals. Different
interpretations are not unexpected (Buteau, 2021). They defined financial literacy as the ability
to make knowledgeable decisions about the use and management of money (Gora & Dahiya,
2022). Financial literacy is managing bank accounts, budgeting, saving for the future, and
preventing or managing debt. Financial literacy enables customers to make informed and secure
decisions on budgeting, spending, saving, and financial goods and services, from everyday
banking to borrowing and future planning (Hamdan et al., 2021). Additional clarifications are
provided for financial literacy.
Financial knowledge is tied to economic education and financial literacy. Financial
education or financial literacy facilitates the dissemination of financial knowledge. Financial
literacy understands economic concepts such as personal finance, money management, credit and
debt, cost savings and expenditures, and risks (Hermawan et al., 2022). The skill of a person to
grasp and utilise financial data for short- and long-term planning is one aspect of financial
literacy (Hutahavan, 2021) as financial literacy factors suggest planning, cost savings, loans, and
chances.
Financial literacy is often associated with a person's level of economic comprehension. It
has now been modified to correspond with financial knowledge, and attitudes have been
included. This research relies on explaining the relationship between knowledge, informed
judgements and financial literacy.
Definition of MSMEs
Small and medium-sized businesses are defined differently in each nation. Different
researchers and organisations have characterised MSMEs based on their specific focus.
However, from an international business viewpoint, MSMEs were characterised based on each
country's economic and social growth concept. MSMEs are defined slightly differently by
various authorities. Multiple definitions have developed over time, sometimes generating
misunderstandings when comparing diverse MSMEs-related statistics (Hamdan et al., 2021).
According to Kuada (2021) two criteria to classify firms as micro, small, or prominent: the
number of employees employed by the company and the value of its fixed assets (excluding land
and building). In addition, the definition employs various thresholds for manufacturing and
service businesses. Microenterprises for manufacturing and service organisations are those with
between $5,000 and $50,000 in fixed assets or between 10 and 24 employees. Small
manufacturing companies have between USD 50,000 and USD 100,000 fixed assets or between
25 and 99 employees. Medium-sized companies have between $100,000 and $300,000 in fixed
assets or between 100 and 250 employees. Small businesses in the service industry must either
have between $5,000 and $10,000 in fixed assets or between 10 and 25 workers. According to
Hamdan et al. (2021) industrial policy, medium-sized businesses have between USD 100,000
and USD 150,000 in fixed assets and between 50 and 100 employees. If a company fits into the

Journal of Entrepreneurship Education Volume 26, Special Issue 1, 2023
4 1528-2651-26-S1-002
Citation Information: Nazim, U.M., Nahar, L., Rahman, M.M., & Saad, N.B. (2023). The Determinants of Financial Literacy Among
Micro, Small, and Medium-Sized Enterprise (Msmes) In Bangladesh And Malaysia. Journal of
Entrepreneurship Education, 26(S1),1-13.
big group according to one criterion and the small category according to the other, the company
will always be classified as significant. The modified definition of MSMEs industrial policy is
widely recognised at the policy level.
According to SME Khan et al. (2022) the definition of MSMEs is often based on
quantitative criteria such as a certain number of employees, sales volume, total assets, or total
capital. Indeed, the description differs in significant ways. In the production sector, for instance,
Micro businesses are those with a sales turnover of less than USD 100,000 and fewer than five
employees, Small businesses are those with a sales turnover of between USD 100,000 and USD
5 million and fewer than 75 employees, and Medium businesses are those with a sales turnover
of between USD 3 million and USD 15 million and fewer than 200 employees. While the
solutions and other industries have different definitions, Micro business is defined as any
business with a sales turnover of less than USD 300,000 or fewer than five employees, whereas a
small enterprise is a business with a sales turnover of between USD 100,000 and USD 1 million
or fewer than 30 employees (Méndez Prado et al., 2022). This definition is suitable since it
considers the characteristics of local financial systems, which is often a fundamental idea for
evaluating company success, and this study will focus only on microbusinesses and small
businesses.
The Malaysian government has been experimenting with various micro financial services
that address the demands of the poor for engaging in micro entrepreneurial endeavours. AIM
programs are often the most prominent among the essential MFIs given in the nation to help the
poor escape poverty. In addition, Islamic microfinance programs, such as AIM, based on the
Syariah and Islamic Finance concepts, have tremendous potential for assisting poor MSMEs
users in expanding and diversifying their financial activities and enhancing their contribution to
the development of appropriate entrepreneurial activities.
Financial Knowledge and Financial Literacy in MSMEs
Kuada (2021) states that lack of knowledge and illiteracy in developing countries,
especially among poor MSME users, is a barrier to financial inclusion. This is due to the
exclusivity of financial goods and services. Style enhancements may deter underprivileged
MSMEs from using banking services (Jenita et al., 2022). Sahadeo (2018), a person with
financial literacy, knows various economic concepts. Financial literacy needs financial
comprehension. According to Ozili (2021), financial literacy encompasses money, savings,
borrowing, and security. Financial literacy enables individuals to make informed and judicious
financial decisions about vital financial products and services. Lack of knowledge and financial
literacy may cause MSMEs to be financially excluded (Sanderson et al., 2018). According to
Kuada (2021), impoverished MSMEs consumers who lack expertise in financial products cannot
use them.
In addition, it assists low MSME users in acquiring information and analysing financial
goods and solutions to make informed decisions and derive the best application (Le Baron &
Kelly, 2021). Economic knowledge consists of financial concepts. Financial literacy may help
MSMEs agents appreciate the aim and methods of conservation (Jenita et al., 2022). Assert that
MSMEs' financial literacy minimises information asymmetry since they are knowledgeable
about financial market products. According to Khan et al. (2022), financial literacy enhances
economic prospects and decision-making. Financial literacy increases people's understanding
and knowledge of financial goods and services (Hutahayan, 2021). Financial literacy aids
comprehension of economic solutions. Encourages the unbanked to shun alternative services

Journal of Entrepreneurship Education Volume 26, Special Issue 1, 2023
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Citation Information: Nazim, U.M., Nahar, L., Rahman, M.M., & Saad, N.B. (2023). The Determinants of Financial Literacy Among
Micro, Small, and Medium-Sized Enterprise (Msmes) In Bangladesh And Malaysia. Journal of
Entrepreneurship Education, 26(S1),1-13.
(Grana-Alvarez et al., 2022). Financial literacy may be enhanced among underdeveloped
MSMEs, particularly in developing countries. By easing decision-making, financial literacy
enhances MSME cost savings, creditworthiness, and poverty alleviation (Jenita et al., 2022).
H1: Financial knowledge has a positive effect on the financial literacy of MSMEs.
Financial Skills and Financial Literacy in MSMEs
Financial inclusion is influenced by financial literacy as a demand-side variable, as
previously documented by academics. Additionally, financial literacy initiatives assist the
impoverished in gaining access to and implementing essential economic solutions. According to
Buteau (2021), new economical solution providers entering the market with more complicated
products and services need the identification of disadvantaged MSMEs. Low financial inclusion
among disadvantaged MSMEs in rural areas indicates an increasing need for MSMEs to develop
financial acumen. Emphasises that disadvantaged rural MSMEs have difficulties making
economic decisions that complicate their lives rather than simplify them. To pick among the
increasing quantity of economic goods and services on the market, they need a great deal of
information and competence (Calcagno et al., 2020).
Financial literacy increases the efficiency and quality of financial services (Anshaika &
Singla, 2022). Users of poor MSMEs demand a high level of economic knowledge and expertise
to assess and evaluate economic goods such as bank accounts, savings items, credit and
mortgage alternatives, payment instruments, opportunities, and insurance. Disadvantaged
MSMEs consumers in developing countries who possess practical economic abilities can create a
savings program (Brochado & Mendes, 2021). Butran (2021) discovered that training unbanked
Indonesians about savings accounts boosted demand among those with low financial literacy. It
assisted them in analysing and selecting essential items for their requirements and instructed
them on their security rights and responsibilities. Garg & Singh (2018) observed that financial
literacy enables disadvantaged MSMEs users to become better-informed economic decision-
makers with a solid understanding of financial difficulties and options and key economic skills.
Financially savvy operators of underprivileged MSMEs who comprehend compound and
loan interest may make quick product consumption judgments. Financial knowledge may
increase item use, which is essential for financial inclusion.
H2: Financial skills have a positive effect on the financial literacy of MSMEs
Financial Attitudes and Financial Literacy in MSMEs
Five fundamental concepts test financial knowledge: basic interest, content interest, Time
Value of Money, the effects of pumping on the price level, and return on investment (ROI)
(Goyal & Kumar, 2021). People with less financial expertise often miscalculate interest rates
(Calcagno et al., 2020). According to an earlier study, participants must answer three questions
about calculating interest rates. Those who correctly answer two or three questions are deemed
informed, whilst those who answer fewer questions are deemed ignorant.
Saving is an essential financial practice. This feature demonstrates financial goal-setting
expertise. The idea emphasises frequent savings. Participants are presented with four savings-
related claims and asked to choose the most suitable one. Four statements address regular and
irregular cost reductions (Jenita et al., 2022).
Financial problems Money is not just a practical good but also a psychological
manifestation of worth or a symbolic representation (Hamdan et al., 2021). Money is a powerful

Journal of Entrepreneurship Education Volume 26, Special Issue 1, 2023
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Citation Information: Nazim, U.M., Nahar, L., Rahman, M.M., & Saad, N.B. (2023). The Determinants of Financial Literacy Among
Micro, Small, and Medium-Sized Enterprise (Msmes) In Bangladesh And Malaysia. Journal of
Entrepreneurship Education, 26(S1),1-13.
driver of behaviour in micro, small, and medium-sized enterprises and a factor influencing work
satisfaction and stress. This suggests that the money attitudes of MSME owners may affect their
economic understanding. The value a person has on money influences their financial literacy.
One's attitude toward money influences their ability to handle finances. Positive views about
money contribute to higher financial awareness and literacy, but negative attitudes result in poor
financial management, lack of understanding, and financial ruin.
Hutahayan (2021) analysed people's budgeting inclinations and discovered that self-
assured budgeters try to justify their expenses. Those who scored lower acknowledged budget
control based on emotional rather than cognitive cost management concepts. A person's
budgeting capacity relies on how they see the money. If someone recognises that money is one
of their most valuable resources, they will attempt to adhere to a budget to maintain a consistent
level of spending. Emotional tracking of one's spending budget is unproductive since it results in
poor records.
H3: Financial attitude has a positive effect on the financial literacy of MSMEs.
Financial Behaviour and Financial Literacy in MSMEs
An additional component of financial knowledge that improves financial well-being
(Hutahayan, 2021). It relies on how individuals act and make financial decisions, such as paying
bills on time, monitoring finances, saving for the future, relying less on borrowings, preparing
for future financial needs, managing excess funds, etc. Responsible individuals are more likely
than irresponsible individuals to enjoy a financially secure future.
According to Goyal & Kumar (2021), lower financial literacy is associated with less
retirement planning, asset accumulation, stock market participation, alternative financial services
usage, and debt. Brochado & Mendes (2021) remark that making informed financial decisions is
essential to establishing stable personal finances, which may result in more efficient resource
allocation and financial stability.
Garg & Singh (2018) assert that financial literacy programs and interventions boost the
uptake of savings accounts and insurance in developing nations where most of the population
lacks access to formal financial services. Training in financial literacy improves the fiscal
conduct of disadvantaged households (Calcagno et al., 2020). It raises knowledge and
comprehension of financial products and affects saving and financial planning.
Hutahayan (2021) discovered that disadvantaged households who can budget, plan, and
save for retirement are more likely to use essential financial services, especially in developing
countries. Financial education helps the poor's savings, insurance, retirement planning, financial
market participation, bank account ownership, investments, debt management, and financial
habits in developing countries (Grana-Alvarez et al., 2022).
Sahadeo (2018) argue that 30 or 90-day late payments on credit accounts result from
human conduct. Inattention or ineffective cash flow management are reflected in loan defaults.
Ozili (2021) advocates for developing financial solutions that steer individuals toward positive
financial behaviors while preserving their freedom of choice. Thus, emerging countries have
leveraged edutainment to push disadvantaged families' financial behaviour toward formal
financial products. Widyastuti & Hermanto (2022) discovered that financial literacy influences
insurance adoption. According to self-reports, financial literacy education increases saving.
A comprehensive meta-analysis of 168 articles covering 201 previous studies revealed
that interventions to improve financial literacy explain just 0.1% of the variance in financial

Journal of Entrepreneurship Education Volume 26, Special Issue 1, 2023
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Citation Information: Nazim, U.M., Nahar, L., Rahman, M.M., & Saad, N.B. (2023). The Determinants of Financial Literacy Among
Micro, Small, and Medium-Sized Enterprise (Msmes) In Bangladesh And Malaysia. Journal of
Entrepreneurship Education, 26(S1),1-13.
behaviour, with lesser gains in low-income groups (Anshika & Singla, 2022). After correcting
for previously absent psychological factors, the findings demonstrated that the partial effects of
financial literacy were significantly diminished. Hypothesis:
H4: Behaviour positively affects the financial literacy of MSMEs in Bangladesh and Malaysia
RESEARCH METHOD
The objectives of the research were met via the use of a survey methodology. A
questionnaire was utilised to collect data to assess individuals' financial literacy. Due to the
respondents' low literacy, the poll was done only in person. The descriptive and inferential
analysis determines MSMEs' financial literacy awareness Figure 1. Locations with a high
proportion of small and micro businesses were prioritised (MSMEs). Respondents for this study
are MSMEs operators who have engaged in the microfinance programs of Malaysia and
Bangladesh. The participants in this study have previously operated MSMEs and expressed
interest in doing so again. This study used a random sampling technique. The final field study
data were imported into SPSS 26 and evaluated to achieve the required statistical results.
FIGURE 1
HYPOTHESIZED MODEL FOR THE STUDY
Source: Prepared by Authors
The questionnaire is disseminated to 500, and the questionnaire collecting is 402. This
research identified MSMEs using a multistage sampling approach, including sub-counties and
villages. In addition, after identifying the villages, a simple random sample method was used to
choose the needed number of impoverished families in each village. For identifying purposes,
unique identifiers were issued to the study's chosen MSMEs.
To ensure consistency, the replies were anchored on a five-point Likert scale of 1-
strongly disagree, 2-disagree, 3-not sure, 4-agree, and 5-strongly agree. Procedure-wise, the final
study's questionnaire kept basic, explicit, and succinct items, and double-barreled questions were
eliminated. In addition, all questions included in the final study's instrument were rewarded for
facilitating interpretation. Thus, these measures were taken to address the issue of common
method bias. Based on two fundamental assumptions, a parametric test was conducted to test for
normal distribution in the data. These included the Field-recommended tests for the assumptions

Journal of Entrepreneurship Education Volume 26, Special Issue 1, 2023
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Citation Information: Nazim, U.M., Nahar, L., Rahman, M.M., & Saad, N.B. (2023). The Determinants of Financial Literacy Among
Micro, Small, and Medium-Sized Enterprise (Msmes) In Bangladesh And Malaysia. Journal of
Entrepreneurship Education, 26(S1),1-13.
of normally distributed data and homogeneity of variance (2005). Using a histogram and scatter
plots, the assumption of normality was examined.
DATA ANALYSIS
The sample of respondents comprised mostly of both AIM and Grameen Bank (GB)
customers, who were both stakeholders in the study. The respondents were sorted into groups
according to their gender, marital status, education degree, and monthly income. These
categorisations will be covered in further detail in the following sections. According to Table 1,
there were 402 male respondents with a mean of 3% and 390 female respondents with a
percentage of 97%. It is important to consider that most of the responders here were female and
had an opposing viewpoint.
Table 1
DEMOGRAPHIC CHARACTERISTICS OF RESPONDENTS (N = 402)
Variable
Frequency
%
Variable
Frequency
%
Gender
Secondary
19
4.7
Male
12
3.0
Degree/Hon's
13
3.2
Female
390
97.0
Masters
3
0.7
Marital Status
PhD
2
0.5
Single
16
4.0
Others
2
0.5
Married
362
90.0
Sales turnover per year
Divorce
18
4.5
Below 1000 USD
391
97.3
Others
6
1.5
1001 - 25000 USD
8
2.0
Age
25000 – 50000 USD
2
0.5
18-29 Years
19
4.7
50000 USD above
1
0.2
30-39Years
99
24.6
Number of Employees
40-49 Years
145
36.1
Below 5
374
93.0
50 years
above
139
34.6
6 to 10
26
6.5
Education
10 to above
2
0.5
Primary
362
90.0
Table 1 shows that 362 (90 %) of the respondents were married, 16 (4%) were single, and
18 were divorced=4.5%, indicating that most of these females are married. The following Table
also shows the number of female entrepreneurs who seems to be prominent in the productive
services to engage in their business activities effectively. Table 1 shows that 145 (36.1 %) of the
respondents were aged 40-49 years old, 139 (34.6%) were 50 years above, and 99 of them were
aged 30-39 years old=24.6 %, indicating that the majority of these females are 40 years above
old. The following Table shows that 90 % (362 respondents) had a primary level of education,
19 (4.7%) respondents had primary education, and the rest 13 respondents (3.2%) had a degree
or hon's level education, which was a bachelor's degree. It indicates that 90 % of the total
respondents from these primary levels are well informed. Some of them were in their first year of
study, while others were in the final year of their study. According to Table, 391 respondents
(97.3%) had a yearly income below USD 10 thousand, and eight respondents (2%) had a yearly
income of USD 25 thousand. The number of employees is below 5 (93%), and 26 responded that
6.5 % of employees are 10.

Journal of Entrepreneurship Education Volume 26, Special Issue 1, 2023
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Citation Information: Nazim, U.M., Nahar, L., Rahman, M.M., & Saad, N.B. (2023). The Determinants of Financial Literacy Among
Micro, Small, and Medium-Sized Enterprise (Msmes) In Bangladesh And Malaysia. Journal of
Entrepreneurship Education, 26(S1),1-13.
Table 2
FACTOR LOADING, MODEL SUMMARY AND KMO TEST
Component
1
2
3
4
5
K1-Savings is very important to ensure that my business will survive.
0.975
K2-The higher the saving rate, the higher return for my business.
0.915
K3-The ability to compute interest is very important
0.892
K4-Knowledge of the rate of inflation is important for my business decision
0.865
K5-Financial knowledge is important to understand products operations
0.875
S1-Financial skills are essential for entrepreneurs
0.795
S2-I should visit my customers to improve my financial skills.
0.785
S3-The use of financial software will enhance my financial skills.
0.758
S4-I use financial skills to explain the products to customers.
0.725
S5-Financial skills can be developed via practice
0.710
A1-I will always maintain a healthy cash flow to manage my business
successfully.
0.766
A2-I should not allow my business to incur expenses unnecessarily
0.745
A3-My business should achieve the targeted profit it has set for business.
0.710
A4-I should constantly monitor my business performance to achieve my target
0.693
A5- Positive financial attitude is essential for achieving profit.
0.634
B1-I review of alternative solutions and the choice of the most suitable
behaviour are essential for entrepreneurs
0.811
B2-I should visit my customers to improve my positive communication.
0.757
B3-I treating others with respect will enhance my business.
0.675
B4-I take accountability for our mistakes in explaining the products to
customers.
0.684
B5-Builds strong professional relationships at work can be developed via
practice
0.679
FL1-Financial literacy will ensure my business prosper
0.674
FL2-Financial literacy enables me to make wise business decisions
0.639
FL3-Financial literacy has a positive impact on my business wealth
0.615
FL4-Financial literacy enables me to expand my business
0.595
FL5-Financial literacy will lead to sustainable business
0.575
Model Summary
R
0.729a
0.531
0.499
0.38263
R Square
Adjusted R Square
Std. Error of the Estimate

Journal of Entrepreneurship Education Volume 26, Special Issue 1, 2023
10 1528-2651-26-S1-002
Citation Information: Nazim, U.M., Nahar, L., Rahman, M.M., & Saad, N.B. (2023). The Determinants of Financial Literacy Among
Micro, Small, and Medium-Sized Enterprise (Msmes) In Bangladesh And Malaysia. Journal of
Entrepreneurship Education, 26(S1),1-13.
KMO and Bartlett's Test
Kaiser-Meyer-Olkin Measure of Sampling Adequacy.
.893
5380.497
435
0.000
Approx. Chi-Square
Bartlett's Test of Sphericity df
Sig.
Cronbach's Alpha
0.867
Cronbach's Alpha Based on Standardised Items
0.918
N of Items
30
In the present investigation, a factor loading cut-off of 0.50 was used to decide which
elements would be included in the factor analysis. Only those elements were kept in the model
whose eigenvalues were equal to or higher than 1. A solution that satisfactorily explained at least
half of the overall variation in the data was adequate. After examining the data using principal
component analysis using a varimax rotation, the initial set of 25 variables was whittled down to
only five elements. It was found that the commonality of each variable ranged from 0.575 to
0.975, with 0.975 being the highest. This suggests that these five factors-knowledge, skills,
attitude, behaviour, and financial literacy-could capture the variation in the initial values with a
satisfactory degree of accuracy Table 2.
Even though an examination of the skewness and kurtosis values was required, it is
advised that such an examination is more suited for samples with more significant numbers (Hair
et al., 2010). The size of this study's sample is deemed substantial since it had a total of 402
independent samples. The consistency and stability of a measure are tested to see whether or not
the measure can be relied upon. The dependability coefficient known as Cronbach's alpha reveals
how effectively the items in a collection are positively associated with one another. When
calculating Cronbach's alpha, the average intercorrelations among the items used to measure the
idea are considered. Internal consistency dependability is stronger when Cronbach's alpha is
closer to 1 than 0.
A regression analysis was done to determine whether the personality traits significantly
predicted how aggressive the participants thought they were. Based on the regression analysis
results, the two predictors' explanatory R-value is 0.729 (R square=0.531, adjusted R
square=0.499, standard error of the estimate=0.38263).
The standardised loading, Cronbach's alpha, composite reliability, and average variance
extraction for the research variables are shown in Table 2. Before conducting an exploratory
factor analysis (EFA), the sample adequacy was evaluated using the Kaiser-Meyer-Olkin
formula (KMO). The results of this study allow the researchers to conclude that the variables
were valid measurements. Additionally, the composite reliability values range from 0.867 to
0.918. Composite reliability of 0.70 or higher, when interpreted as an estimate of Cronbach's
alpha for internal consistency reliability, is regarded as satisfactory. As a result, the findings of
this research indicate that the measurements were accurate.
Similarly, Bartlett's Test of Sphericity has also been carried out to guarantee an adequate
correlation between the variables. As seen in Table 2, the outcomes of the KMO test come in at
0.893, and the findings of the Bartlett test indicate that they are significant (p.000). These results
show that the sample size was big enough to successfully allow factor analysis and the separation
of the different latent variables from each other.

Journal of Entrepreneurship Education Volume 26, Special Issue 1, 2023
11 1528-2651-26-S1-002
Citation Information: Nazim, U.M., Nahar, L., Rahman, M.M., & Saad, N.B. (2023). The Determinants of Financial Literacy Among
Micro, Small, and Medium-Sized Enterprise (Msmes) In Bangladesh And Malaysia. Journal of
Entrepreneurship Education, 26(S1),1-13.
According to the results of the ANOVA, people's perceptions of whether or not they are
financially included considerably vary depending on whom they ask. According to the
requirements, the p-value for each construct was significant at p 0.05. Table 3 displays the
findings of the ANOVA, which can be seen above. According to the data, the outcome of the
ANOVA substantially impacts the level of financial literacy, which indicated that interventions
to increase financial literacy significantly account for 0.000 % of the differences in financial
literacy.
Table 3
ANOVAA
Model
Sum of Squares
df
Mean Square
F
Sig.
1
Regression
60.771
25
2.431
16.604
0.000b
Residual
53.584
366
0.146
Total
114.356
391
a. Dependent Variable: FL factor score 5 for analysis 1
b. Predictors: (Constant), FK factor score 4 for analysis 1, FSA factor score 3 for
analysis 1, FA factor score 2 for analysis 1, FS factor score 1 for analysis 1
The results of this study also show that financial literacy improves several behaviours,
such as understanding how to participate in the (economic) market, making investments,
managing debt, and understanding how the economy works. These are important for the poor
who live in developing countries where H1-produced research was done. It is also a skill that can
be learned with financial literacy, H2 knowledge, and the desire to program their money to
change their behaviour so they can stick to their plans to save and borrow. These are all things
that can be accomplished. In terms of financial literacy, the results also showed that there isn't
always a strong link between a person's skills and how much they participate in the economy.
The impoverished may be given behaviours that do not align with their cognitive schemas, which
may hinder their efforts to become economically involved. This may be detrimental to their
progress. The results don't go against the H4 found during this investigation. This is the second
part of a series that started with H3, which talked about how attitude positively affects financial
literacy in rural Malaysia. On the other hand, the results showed that attitude had a significant,
positive effect on financial literacy. In particular, one of the aspects of financial literacy that
contributes to economic inclusion in Bangladesh and Malaysia is attitude. In addition, financial
literacy use and the use of financial goods in developing nations that are directly tied to attitude
depend on the individuals' level of confidence in financial organisations and the things and
services that these organisations provide. When consumers know more about essential systems,
they feel more confident, and their interests are better protected.
CONCLUSION
The new research contributes to the existing body of knowledge on financial literacy
among MSMEs and will substantially impact the degree to which company owners in
Bangladesh and Malaysia are financially included. According to the study's findings, attitude
affects the financial literacy of company entrepreneurs working for AIM and Grameen Bank.
However, the study showed that knowledge, skill providers, attitude, and behaviour are
significant determinants of financial literacy in Bangladesh and Malaysia. This selection in
norms of financial literacy, which influences their behaviours as business owners, might be
described using aspects of MSMEs. The primary reasons why micro, small, and medium-sized

Journal of Entrepreneurship Education Volume 26, Special Issue 1, 2023
12 1528-2651-26-S1-002
Citation Information: Nazim, U.M., Nahar, L., Rahman, M.M., & Saad, N.B. (2023). The Determinants of Financial Literacy Among
Micro, Small, and Medium-Sized Enterprise (Msmes) In Bangladesh And Malaysia. Journal of
Entrepreneurship Education, 26(S1),1-13.
enterprises (MSMEs) struggle with financial literacy are a lack of recognition of the various
types of financial items and whether or not they match specific requirements, a low level of
confidence, and specific behaviours that prevent use and trust in formal economic items create
barriers to access. So, policymakers should consider the MSMEs' financial literacy factors and
qualities, which affect their actions and behaviours, especially those of business owners, when
they use financial literacy interventions to help MSMEs join the economy, especially in AIM and
Grameen Bank. In addition, authorities should ensure that initiatives designed to improve
financial literacy are geared toward altering micro, small, and medium-sized enterprises
(MSMEs) and boosting knowledge, skills, attitudes, and behaviours that contribute to financial
literacy. In the same vein, governments should encourage micro, small, and medium-sized
enterprises (MSMEs) participating in AIM and Grameen Bank to become economically included
by encouraging them to adopt financial products suitable for their current financial status and
position. Because individuals learn from one another via statements, imitation, and modelling in
social interaction, proponents of financial literacy should also ensure that it is used within the
context of a social setting rather than in isolation. In addition, policymakers in Bangladesh and
Malaysia should be aware that promoting MSMEs among the financially literate population may
not be possible using financial literacy software alone. There may be a desire to build and deploy
future apps for financial education that focus more on behavioural change for the company
entrepreneur's knowledge and abilities to be used acceptably. This may be a possibility.
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Citation Information: Nazim, U.M., Nahar, L., Rahman, M.M., & Saad, N.B. (2023). The Determinants of Financial Literacy Among
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Received: 11-Sep-2022, Manuscript No. AJEE-22- 12540; Editor assigned: 13-Sep -2022, Pre QC No. AJEE-22- 12540(PQ); Reviewed: 27-
Sep-2022, QC No. AJEE-22- 12540; Revised: 04-Oct-2022, Manuscript No. AJEE-22- 12540(R); Published: 11-Oct-2022