The mediating role of financial access in the effect of financial literacy on firm performance

Financial literacy has been identified as one of the major competencies required for the establishment, management and success of SMEs. However, there is almost no empirical studies on the relationship between financial literacy and SMEs' performance in Turkey, hence the need for further research in this area. This study sought to establish the relationship between entrepreneur financial literacy, financial access and performance of SMEs in Gaziantep, Adıyaman and Kilis. The study was guided by three objectives namely; to establish the relationship between entrepreneur financial literacy and performance of SMEs; to determine the relationship between entrepreneur financial literacy and financial access; to establish the influence of financial access on the relationship between financial literacy and performance of SMEs. The study population comprised of all SMEs in TRC1 Region, from which a representative sample of 395 SMEs was drawn. The main study instrument was a questionnaire which comprised of likert-type scale questions on the main variables of the study. The findings of the study indicated that entrepreneur financial literacy had a statistically significant influence on enterprise performance therefore the hypothesis that financial literacy influences enterprise performance was supported. The study also established that financial literacy had a statistically significant influence on financial access therefore the hypothesis that financial literacy influences financial access was supported. The study also revealed that intervening influence of financial access on the relationship between entrepreneur financial literacy and performance of SMEs was statistically significant. Further, the results revealed that level of financial literacy and financial access of SMEs change according to the duration of the firms, the number of employees of the enterprises, the legal status of the enterprises and the existence of a separate financial department of the enterprises.