Financial Literacy among SMEs Owners in Sumatera, Indonesia: The Role of Parents’ Motivation and Experience
Abstract
Financial literacy is the ability of an individual to obtain financial information and take effective actions or decisions to manage any financial matters. The owners of SMEs should manage their financial business effectively to avoid financial problems. In 2013, the financial services authority (OJK) has conducted a financial survey and the result indicated that only 21.8% of people understand finance and in 2016, the percentage has increased from about 8% to 29.66%. Low level of financial literacy gives bad effect on financial decisions, including less saving, opting for more leverage, and involved in unprofitable investments. This paper aims to analyze the influence of parents’ motivation and parents’ experience on financial literacy. A questionnaire survey has been distributed among SME owners in Sumatera, Indonesia. Based on a sample of 60 respondents, the result shows that parents’ motivation does affect financial literacy. Nevertheless, financial experience by the parents does not affect financial literacy.
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