ASSESSING THE IMPACT OF FINANCIAL BEHAVIOUR ON THE PERFORMANCE OF MICRO, SMALL AND MEDIUM ENTERPRISES (MSMEs) IN SOUTHWEST, NIGERIA

Abstract

This study investigated the impact of financial behaviour on the performance of Micro, Small, and Medium 
Enterprises (MSMEs) in Southwest, Nigeria. The research focused on four key businesses: kitchen-bread, catering, 
phone repairers’ services, and agriculture. The sample of 357 was selected using Cochran’s formula out of which 
289 responded to the survey questionnaire. The research instrument was titled “financial literacy and performance of 
micro, small and medium scale enterprises questionnaire”. The questionnaire was validated by two expertise in the 
entrepreneurship department and one expert in test and measurement. The reliability of the instrument was 
ascertained using a Cronbach’s Alpha method and the coefficient of 0.87 was obtained, which indicate that it is 
reliable to collect all the necessary data.  The study employed a descriptive survey research design, and data were 
analyzed using descriptive statistics via the Statistical Package for Social Sciences (SPSS, Version 26). The findings 
showed that financial behaviour had a significant and positive effect on non-financial performance indicators such 
as customers’ retention and loyalty. The study concluded that how MSMEs handle, organize, and prioritize their 
financial operations has a direct bearing on their capacity to sustain long-term relationships with customers. The 
study therefore recommends there is need to establish operational stability that enhances consumer trust and loyalty, 
MSME proprietors should implement and adhere to prudent financial procedures, including budgeting, 
reinvestment, and meticulous record-keeping. Also, development agencies and financial advisers should educate 
MSMEs on behavioural finance, emphasizing the establishment of ethical financial practices that promote customer
centric growth and sustained enterprise success.