Implications of Financial Literacy on Entrepreneurship

Financial literacy is the focus of today’s scientific research and has attracted considerable attention. The research focused almost on measuring and interpreting the financial literacy of individuals and households. Research on the general financial literacy of entrepreneurs has so far been limited. Entrepreneurs are drivers of innovation and growth and their ability to make the right financial decisions requires financial literacy among entrepreneurs. The OECD has defined financial literacy of entrepreneurs as the combination of awareness, knowledge, skills, attitudes, and behavior that a potential entrepreneur or an owner or manager of a micro, small, or medium-sized enterprise should to make effective financial decisions to start a business, run a business and ultimately ensure its sustainability and growth. This defines the general need to understand whether entrepreneurs have the skills/abilities or are accessible to make “effective financial decisions”. Such decisions may concern the use of short and longterm capital of their enterprises, working capital and investment decisions, and access to finance for the latter, financing decisions (OECD, 2018). This paper examines the implications of financial literacy on entrepreneurship that emerge from contemporary research and provides approaches for further necessary research in this area.