THE IMPACT OF FINANCIAL LITERACY ON ENTREPRENEURIAL FINANCIAL PERFORMANCE AMONG WOMEN-OWNED ENTERPRISES IN INDIA: THE MEDIATING ROLE OF FINANCIAL CAPABILITY

Abstract

Women entrepreneurs have become one of the major players in the Indian economy in terms of economic development, employment generation, and social empowerment. But maintaining sustainable financial performance was still a significant challenge because of financial knowledge, financial management procedures, and access to financial resources. Here, financial literacy has become a very significant factor because of its importance in determining the success of an entrepreneur. This study examines the relationship between financial literacy and the entrepreneurial financial performance of women entrepreneurs in India, highlighting the mediating effect of financial capability. The study was quantitative in nature and has a structured questionnaire as the instrument for the collection of primary data from the women entrepreneurs in different sectors. Financial literacy was measured using financial knowledge, financial attitude, and financial behavior dimensions, and financial capability was measured using budgeting, financial planning, recordkeeping, cash flow management, and debt management dimensions. The assessment of entrepreneurial financial performance was done by indicators of profit, income growth, business expansion, and financial stability. The statistical analysis tool was used to analyze the relationship between the variables of the study, which are descriptive statistics, correlation analysis, and structural equation modeling (SEM). The results indicate that financial literacy has a significant positive relationship with financial capability and the performance of entrepreneurs' financial activities. Financial capability also shows to be positively associated with entrepreneurial financial performance and has been found to be a strong mediator in the link between financial literacy and entrepreneurial outcomes.