Digital Financial Literacy and Business Success of SMEs in Pakistan

Purpose-Role of SMEs in growth of an economy is unquestionable. In developing countries like Pakistan SMEs make notable contributions. Despite the growth of the other sectors in economy, among other factors, scarcity of financial and technical knowledge is the main reason for failure of SME sector in developing countries. Previous research has focused on financial aspects to measure the success but ignored the financial knowledge aspect. Therefore, current study covers financial knowledge aspect with the use of current digital channels. The purpose of the study is to investigate the effect of Digital Financial Literacy on Business success of SMEs. The study will also check the role of enterprise risk management practices as mediator between the two variables. Design/Methodology/Approach-Structure questionnaires are used to collect the data for this study. 360 questionnaires filled by SME owner/top manager were received in two waves from various sectors of SMEs. Hayes Process Macro using SPSS and Amos v.24 has been used for analysis of data. Findings-After data analysis, results of the study shows that digital financial literacy has positive impact on business success of SMEs and enterprise risk management practices partially mediate the relationship between the two variables. Practical Implications-This study provides notable applications for SME owners and top managers by establishing the strong linkage between digital financial literacy and business success. The study authenticates the importance of technical and financial education in SME sector to assure the business success.  The study validates the implication of risk management practice in SMEs. Originality/Value-Limited research work exists in literature to check the impact of financial literacy on business success for SMEs. Literature about impact of digital financial literacy on business success is rare. That is why the current study contributes the literature by providing empirical evidence. Study also contributes the literature by providence the evidence of positive linkage between digital financial literacy and business success through risk management practices.