ASSESSMENT OF THE LEVEL OF FINANCIAL LITERACY AMONG

MICROENTREPRENEURS IN RELATION TO THEIR BUSINESS GROWTH

A Research Proposal
Presented to the
Faculty of the College of Business and Accountancy
JOSE RIZAL MEMORIAL STATE UNIVERSITY
The Premier University in Zamboanga del Norte
Dapitan City, Philippines

AL-OS, APRIL MAE M.

LAGE, JELA C.

MANABA, MAY JISAPER C.

TAMIROY, KIM LESTER T.

VILLARIN, RHEZE MELCAH P.

(BSMA III)
APPROVAL SHEET
 DEDICATION

This piece of work is a fruit of countless sacrifices and efforts. They heartily and proudly

dedicated this paper to everybody, especially those persons that were part and make this work

successful. From parents and guardians, to classmates and circle of friends whom extended their

help in the midst of problems while doing this paper. Above all, to the Almighty Father for His

love, care and guidance throughout our research process.

The Researchers
 ACKNOWLEDGEMENT

This study was made successful through the aid of important individuals who provided

direction and support the researchers over the course of this study’s completion. The researchers’

utmost gratitude is given to the following persons who helped widen their viewpoints throughout

this study.

To parents, who supported financially, morally, and spiritually from the time we started

our research study until its completion. Their encouragements gave us the motivation and spirit

to complete our work.

To the ever dynamic and enthusiastic research instructor, Dr. Ana Flor C. Adrias who

endlessly supported us and continuously guided us in our research process in drawing out our

ideas and skills in writing.

To our Research Adviser, Mr. Jay A. Roslinda, for sharing his knowledge and expertise

and for supervising us in writing our paper.

To the Subject Matter Experts, that cordially lend a hand in validating our instrument to

ensure it was organized, precise, and aligned to the variable used in the study.

To the Panelists, Mr. Janven A. Granfon, Dr. Ana Flor C. Adrias and Ms. Lovelle

Pallega, for their insightful comments and suggestions for the best outcome of our research

paper.

To our supportive and encouraging friends, who have been there to keep them determined

and resolved in making their way through finishing and submitting their study within the

specified time frame of submission.

 And foremost, to the Almighty God, for the guidance and strength He bestowed us all the

way to accomplish this research study.

ABSTRACT
 TABLE OF CONTENTS

Page

TITLE PAGE i

APPROVAL SHEET ii

DEDICATION iii

ACKNOWLEDGEMENT iv

ABSTRACT vi

TABLE OF CONTENTS vii

LIST OF TABLES

LIST OF FIGURES

CHAPTER

1 THE PROBLEM AND ITS SCOPE

Introduction

Conceptual Framework

Schematic Diagram of the Study

Statement of the Problem

Significance of the Study

Scope and Delimitation of the Study

 Operational Definition of Terms

2 REVIEW OF RELATED LITERATURE

Financial Literacy

Debt Management Literacy

Budgeting Literacy

Banking Services Literacy

Bookkeeping Literacy

Micro-entrepreneurs

Business Growth

Sales Revenue

Accumulated Assets

Number of Employees

3 RESEARCH METHODOLOGY

Research Method

Research Environment

Respondents of the Study

Research Instrument
 Validating the Instruments

Reliability of the Instruments

Data Gathering Procedure

Statistical Treatment

4 PRESENTATION, ANALYSIS, AND INTERPRETATION OF DATA

5 SUMMARIES OF FINDINGS, CONCLUSIONS AND

RECOMMENDATIONS
Restatement of the Problem

Summary of Findings

Conclusions

Recommendations

BIBLIOGRAPHY

APPENDICES

Appendix A – Endorsement Lettre for Proposal Defense

Appendix B – Letter of Request

Appendix C – Cover Letter

Appendix D – Permission Letter for the System Dean

Appendix E – Letter to the Respondents

Appendix F – Questionnaire
CURRICULUM VITAE
 LIST OF TABLES

TABLE NO. PAGE

1 Respondent’s Distribution 30

2 Pilot Testing of Variables using Cronbach’s Alpha 31

3 Respondents’ Profile in terms of Gender

4 Respondents’ Profile in terms of Age

5 Respondents’ Profile in terms of Educational Attainment

6 Respondents’ Profile in terms of Nature of Business

7 Respondents’ Profile in terms of Years of Operation

8 Financial Literacy in terms of Debt Management Literacy

9 Financial Literacy in terms of Budgeting Literacy

10 Financial Literacy in terms of Banking Services Literacy

11 Financial Literacy in terms of Bookkeeping Literacy

12
 LIST OF FIGURES

FIGURE NO. PAGE

1 Schema of the Study 9

2 Map of Dapitan City 29

 Chapter 1

THE PROBLEM AND ITS SCOPE

Introduction

Economic activity is a fast-changing phenomenon, particularly in the business

industry hence, it makes sense that many entrepreneurs find it difficult to deal with

numerous problems arising from certain circumstances. The business activities of various

companies regardless of their size are considered the lifeblood of the economy, given the

fact that they focus on making a profit (money) and investing in human capital, thus it is

vital in the economic growth of a country, especially in the Philippines.

As a result, both practitioners and researchers in established and emerging

countries are working to identify the variables that influence entrepreneurial success.

Related skills and knowledge in financial literacy are among the qualifications for

entrepreneurs’ success (Rahmandoust et. Al., 2011). Numerous studies on personal

financial literacy conducted around the world have revealed that the majority of people

have very low levels of financial knowledge and expertise. This lack of financial literacy,

which is more pronounced for lower-income groups, is the root cause of people’s

financial difficulties. They don’t have a basic concept of how markets work, how to

handle their money, and other compound interests, inflation, and risk diversification are

examples of financial concepts.

Business firms can hire professionals as their consultants to guide them in

managing and improving their business operations which is significant to the expansion

of the economy (Guliman, 2015) but, not all businesses have the luxury to do so

1
(Gonzalvo & Avila, 2019). With this case, they further added that micro-entrepreneurs

are encouraged to rely on their own capabilities, knowledge, behavior, and experiences to

aid the company in handling financial and operational crises which require conceptual

decision-making that might resolve some of the hindrances of a business to perform

longer. The attributes that a manager possesses, however, are not enough to ensure a

company’s success as bankruptcy or financial difficulties is still inevitably possible.

According to the findings of Gonzalvo and Avila (2019), micro-business owners with a

high level of financial literacy tend to meet their bottom line positively which contributes

to a business earning a higher profit. Considering the fact that, business growth is

strongly correlated to financial literacy, its relationship plays a crucial role in the

progression of a business operation in various phases. So financial literacy of micro-

entrepreneurs would greatly affect their business performance while on the run.

The significance of knowing the concept of money for micro-entrepreneurs is

essential in managing their business well. Therefore, small business owners are advised

to give more emphasis on their financial literacy based on recent research and study

findings. Financial literacy provides the necessary knowledge, skills, and instruments for

individuals, specifically entrepreneurs and businessmen/women to make informed

judgments with efficiency in terms of financial aspects leading to an increase in financial

competence. Unlike corporations, micro businesses have only very limited resources to

keep on operating in the industry which somehow results in a static progress of financial

literacy among micro-entrepreneurs that give them struggle in financial management.

Apart from limited resources, financial ignorance frequently causes an economic crisis

(Sukumaran, 2015) which is linked to poor planning, nonparticipation, and bad

2
borrowing habits (Lusardi & Mitchell, 2014). Addressing these issues has been a major

concern for a long time. Therefore, additional research on financial literacy became

excessive recently given that the business world is turbulent and financial education has

been proposed to many entrepreneurs, especially to those small businesses that will help

increase their financial literacy for more developed financial stability.

The exploration of financial literacy in different individuals: youth, students,

employees, business owners, and the general population has determined many factors and

variables that could help enhance their financial literacy, which is through education,

financial inclusions, and efficient training/programs. According to Bire et al. (2019),

financial literacy has a direct relationship with financial inclusions mediated through

financial training. They further added that an increased frequency of financial training in

micro businesses is necessary, which results in a better understanding of the financial

product. Additionally, with the implementation of sufficient programs of financial

education, it is expected that financial literacy levels will rise, the likelihood that small

business owners will face financial difficulties as a result of within their control factors,

such as excessive debt, will decrease, and the proportion of small business owners who

are merely employees of their companies rather than becoming leaders will be reduced

(Fernandes, 2015).

In the Philippines, a number of researchers conducting a study regarding the level

of financial literacy of micro-entrepreneurs recommended that further study is needed to

find out reasons and solutions in improving or alleviating the problem and suggested

measuring their level of financial literacy with other factors or variables that have a

correlation to business performance. Moreover, financial literacy is one of many

3
indicators a business owner has to keep the business running. The bottom line (net profit)

of a business, which is a result of the various operations and performance a firm has

undertaken, explains the capacity of the business owner and the enterprise it handles to

continue working in the business industry.

In relation to that, the small businesses in Dapitan City, some but not all, show no

growth or small development in their business operations. With that case, the researchers

have taken into consideration the “Assessment of the Level of Financial Literacy among

Micro-entrepreneurs In Relation to Business Growth” in Dapitan City which would

provide a basis for knowing their degree of understanding of the four financial concepts:

budgeting, saving, investing, and borrowing for improvements that is beneficial to their

overall business operations. The results of this study will serve as an eye-opener for the

micro-entrepreneurs and business institutions as a whole to engage more in financial-

related programs that specifically aim to increase the financial literacy of micro-

entrepreneurs.

Conceptual Framework

This study is anchored on the research work of Lusimbo (2016) entitled

“Relationship between Financial Literacy and the Growth of Micro and Small Enterprises

in Kenya: A Case of Kakamega Central Sub-country” where she used debt management,

budgeting, access to banking services, and bookkeeping literacy in measuring the

financial literacy of MSE owners.

Debt Management Literacy. Studies reveal that individuals with less financial

literacy are likely to face more challenges with regard to debt management, savings and

4
credit, and are less likely to plan for the future while those with higher financial literacy

are better able to manage their money, participate in the stock market and perform better

on their portfolio choice and are more likely to choose mutual funds with lower fees

(Hilgert, Hogarth, & Beverly, 2003; Lusardi & Mitchell, 2011; FSD, 2009). Moreover,

those who have greater financial knowledge are more likely to accumulate higher

amounts of wealth, have better debt management skills and avoid high interest payments

(Lusardi & Mitchell, 2011; Wachira & Kihiu, 2012). On the contrary, those who are

financially illiterate tend to borrow too much and generally use more expensive sources

of finance that may impact negatively on their business performance and are also likely to

report excessive debt position or inability to measure their debt position (FSD, 2009;

Master card, 2011). Obago (2014) in a study that sought to determine whether financial

literacy had any effect on personal financial management practice among employees of

commercial banks in Kenya using a sample of 100 respondents revealed that higher

numeracy skills have a positive relationship with higher levels of household wealth and

good financial decisions while poor numeracy was linked with unnecessary expenses.

Individuals with stronger numeracy and financial literacy are also more likely to

participate in financial markets and to invest in stocks.

Budgeting Literacy. A budget is a plan that describes all future business

activities expressed in financial terms. It is the yardstick by which an organization’s

performance is measured. Budgeting on the other hand is the process of preparing,

compiling, and monitoring financial budgets (Nugus, 2006). Budgeting is a key

management tool for planning and controlling departments within an organization.

Budgeting is an aid to better management of an enterprise and helps to achieve higher

5
profits and minimize losses. Siekei et al.,(2013) established that there is a positive

relationship between budgeting skills acquired through financial literacy training and

improved performance of MSEs in terms of increased sales and business profitability as it

provides a basis of establishing performance targets. However, Fatoki (2014) established

that most micro enterprises are survivalist they might have some form of budgeting and

financial planning and control but on an informal basis a view that is corroborated by

Abanis, Sunday, Burani & Eliabu (2013) who found that most small businesses do not

engage in formal financial planning and control and budgeting.

Banking Services Literacy. The increase in the number and complexity of

financial products requires MSEs to have some level of financial knowledge in order to

select from among alternatives the best products for their businesses. Andoh and Nunoo

(2011) found that the financial literacy of owners of MSEs is a very important factor in

explaining utilization of financial services by MSEs. Low levels of financial literacy can

prevent MSEs from understanding and assessing financial products from financial

institutions. On the other hand, MSE managers who are financially literate will mount

competitive pressure on financial institutions to improve their products. Wachira and

Kihiu (2012) conducted a study to establish the impact of financial literacy on access to

financial services in Kenya by households using the 2009 National Financial Access

(FinAccess) survey data using the multinomial logit model. Findings revealed that factors

such as the age of the borrower, income, level of education and gender were significant in

determining access to financial services while marital status was found insignificant.

Financial literacy was also rated low as a factor in household decision making which

implies that majority of individuals did not value and seek out financial information in

6
making financial decisions although financial literacy was significant in explaining

exclusion from financial services market. Results also indicate that financial knowledge

reduced the probability of an individual remaining excluded by 8.5% an indication that

with increased sensitization, more people can be pulled out of the excluded strand.

Education serves to enlighten people on the various financial services available while at

the same time creating awareness on how best to manage the available services. This

study only dwelt on how financial literacy affected access to financial services of

households and did not show how it affected business growth.

Bookkeeping Literacy. Larry and Cristopher (2009) define book keeping as “the

art of recording all money transactions so that financial position of an undertaking and its

relationship to proprietors and outside persons can be readily ascertained”. Every

enterprise, however simple requires written records which are used by managers as

guides to routine action, taking of decisions, formulation of general rules and maintaining

relationships with other organizations or with individuals (Frankwood, 2010). Therefore a

business without written records is like a blind man without his aid or a vehicle without a

driver for it does not know which way it is going. Frankwood, (2010) identifies the

following as the main benefits of keeping business records; They help in calculating

business profits or losses, reveal value of debtors in terms of amount due and when

payments are due so as to avoid heavy costs of bad debts, They reveal fast moving and

slow moving goods and those about to expire, They also help in business planning and

are needed by lenders of business finance etc. Hussein (1983) as cited by Ezejiofor,

Ezenyirimba, & Olise (2014) notes that, a good accounting system is not only judged by

how well records are kept but by how well it is able to meet the information needs of both

7
internal and external decision-makers. Quality accounting information will enhance

financial management as well as accessibility of finance by small businesses. Wise

(2013) finds that increase in financial literacy leads to more frequent production of

financial statements and such an entrepreneur who produces financial statements more

frequently has a higher probability of loan repayment and a lower probability to

voluntarily close his/her business. Ezejiofor et al., (2014) in a study to establish the

relevance of accounting records in small business performance in Nigeria found that

MSEs that kept proper books of account were able to measure accurately the performance

of their businesses. They also assert that business decisions with regard to expansion,

maintaining a competitive edge, prevention of business failure and filling tax returns need

to be supported by quality financial information which needs to be relevant, user friendly

and available in a timely manner. They caution that accounting systems that generate the

information should be simple in order not to impose unnecessary operative burdens.

Micro-entrepreneurs’ business growth. The Micro and Small enterprise sector

plays a critical role in economic growth of both developed and developing economies

which affirms the recent attention to the growth and sustainability of this sector. This

focus has been boosted by the formation of worldwide networks such as the Global

Entrepreneurship Network that aims at marshalling resources for the sector through

forums such as the Global Entrepreneurship Summit. Enterprise growth can be measured

in various ways. Gupta ,Guha, & Shiva (2013) suggests the use of quantitative features

such as; value addition, revenue generation, volume of assets and volume of business or

qualitative features like market position, quality of product, and goodwill of the

customers, on the contrary Mateev and Anastasov (2010) opines that financial structure,

8
productivity, sales revenue and total assets have a more direct impact on growth but

caution that the number of employees, investment in Research & Development, and other

intangible assets have minimal influence on the enterprise’s growth prospects. Chaston

and Mangles (1997) as cited by Lusimbo (2016) suggest that if an enterprise adopts

multi-strategy transformation initiatives, the probability of achieving the growth objective

increases . In the study of Lusimbo (2016) she focused on the financial literacy skills of

the entrepreneur and how it affected the growth of MSE businesses. Growth was

measured in terms of sales revenue, accumulated assets and number of employees.

Meanwhile, below is a schematic diagram that identifies the independent and

dependent variables of the study. The first box found the financial literacy variables

which consist of debt management, budgeting, investing, and bookkeeping literacy. The

arrow pointing the second box is the dependent variable which is the business growth.

Independent Variable Dependent Variable

Financial Literacy
Business Growth
 Debt Management
 Sales Revenue
 Budgeting
 Accumulated Assets
 Investing
 Number of
 Book Keeping
Employees
Literacy

Figure 1. Schema of the study

9
Statement of the Problem

The purpose of this study is to assess the level of financial literacy among micro-

entrepreneurs in correlation to their business growth in Dapitan City.

Specifically, it sought to answer the following research questions:

1. What is the socio-demographic profile of the respondents in terms of:

1.1 Gender,

1.2 Age,

1.3 Educational attainment,

1.4 Nature of business and

1.5 Years in operation?

2. What is the level of financial literacy among micro-entrepreneurs in terms of:

2.1 debt management literacy,

2.2 budgeting literacy,

2.3 investing literacy, and

2.4 book keeping literacy?

3. What is the business growth of MSMEs in terms of?

3.1 Sales revenue,

3.2 Accumulated assets,

3.3 Number of employees?

4. Is there a significant relationship between financial literacy and the business

growth of MSMEs?

10
Hypotheses

1. There is no significant relationship between financial literacy and the business growth

of MSMEs?

Significance of the Study

The results of this study are highly beneficial to the following individuals and

entities:

Business Institutions. The results may awaken the business institutions for a well-

equipped financial management by implementing and partaking programs and seminar to

enlighten them the importance of financial literacy as tool to meet their goals and

objectives.

Future Researchers. The future researchers will be able to use this study as reference to

gather relevant information that will guide them for their future research study.

Micro-entrepreneurs. The micro-entrepreneurs will be able to use this research study as

their reference in knowing their deficiency from the different aspect of financial literacy

that help them in making improvements to fill in the needed areas regarding financial

sector.

Researchers. The researchers will gain knowledge about financial literacy that can also

be applied for personal financial management.

Young entrepreneurs. The young entrepreneurs, aspiring and/or already engage in

business will be able to use this study as basis to know their financial literacy level and

made improvements through training or engaging in seminar programs.

11
Scope and Delimitation of the Study

This study is limited to the assessment of the Level of Financial Literacy among

Micro-entrepreneurs in relation to the business growth in Dapitan City. Additionally, the

study will measure the financial literacy of micro-entrepreneurs within the vicinity of

Dapitan City in terms of debt management, budgeting, banking services, and

bookkeeping literacy. This research study will be conducted among the different micro

businesses in the city of Dapitan. Furthermore, it covers those entrepreneurs that are

engaged to small scale businesses.

Operational Definition of Terms

The operational meaning of words is a detailed description of a technical

terminology and measurements used during data collection. This is necessary to preserve

the data consistency. The following terms are defined for better clarity and proper

understanding of the study.

Accumulated Assets. Typically refers to the acquisition of financial assets that represent

value or yield income.

Book Keeping Literacy. The capacity to understand and use the meta-language of

accounting to record transactions accordingly so that business activities within and

outside the entity can be readily ascertained.

Budgeting Literacy. The knowledge of creating a defined plan to monitor and allocate

specified budget for the company’s financial performance.

12
Business Growth. A reflection of the operation of the business or performance

measurement tool which determines the on-going status and growth of the business.

Debt Management Literacy. Ability to use mathematical concepts in making sound

decisions regarding financial planning to control borrowing activities.

Employees. Individuals who work for an employer and who have a contract of

employment and receive compensation in the form of wages, salaries, and fees.

Financial Literacy. The capacity to utilize information and skills in the context of

making decisions to successfully manage financial resources for long-term financial

security.

Investing Literacy. The knowledge of an individual to engage in banking transactions

were putting money into the bank with the potential to grow in value over time.

Awareness and understanding regarding financial interest it provide in the business or

other asset you invest in.

Micro-entrepreneurs. Business owners and founder of a small-scale business that have

ten or less employees.

Sales Revenue. The money a company makes from selling products or rendering

services.

13
 Chapter 2

REVIEW OF RELATED LITERATURE

This chapter presents the journal and studies related to the research conducted that

is reviewed purposely to expand the understanding and to add explanation on the

theoretical and conceptual framework of the study.

Financial Literacy

In the course of time, the business-related activities have significant changes that

affect its supporting sectors, specifically the financial sector that aid the MSMEs to keep

performing in the industry. So recently, financial literacy has been heeded by scholars

because financial meltdown experienced by many economies became prominent,

therefore lots of studies is conducted to resolve one of its many problems and mainly for

the security of financial sector (Guliman, 2015). Evidently, the complexity of today’s

financial environment is more intricate than it was before (Guliman, 2015, as cited by

Greenspan, 2005), and admitting the need of financial literacy will oversee this issue

among (Garg & Singh, 2018). There are various researches supported that a financial

literate person has more chances on achieving success, so having low financial

knowledge will have an antithetical outcome of the enterprises of all types (Gonzalvo &

Avila, 2019).

In the USA in 1787, the phrase “financial literacy” was first used in a letter to

Thomas Jefferson from John Adams, explaining that financial literacy is needed to

overcome the spread of difficulties in America towards credit, circulation, and nature of

14
coin (Garg & Singh, 2017, as cited by Financial Corps, 2014). As for this aspect, the term

financial literacy was used by several researcher and organization thereafter, and have

grown different views and understanding on the concept of financial literacy.

Additionally, financial literacy was linked to financial knowledge, but the latter is one of

its junctures to become financially literate.

This operational definition, encompasses the four most common areas of financial

aspect: budgeting, savings, borrowing, and investing (Dahmen & Rodriguez, 2014, as

cited by Remund). However, the financial knowledge alone did not entirely define the

notion behind financial literacy because financial skills and confidence are needed by

micro and macro entrepreneurs to have productive judgements. Studies shows that a

person with high degree of financial literacy tend to understand and perform better in

terms of numeracy, earnings and savings, investment and loan decisions, have low

spending capacity during crisis, and less likely to experience income shock since they

know the time value of money.

Understanding how financial illiteracy affects entrepreneurship/business is

important for developing methods for a nation’s populace to become financially literate.

People with higher levels of literacy are more likely to create budgets, save money,

manage their spending and debt responsibly, trade stocks, and prepare pension funds,

among other things. In other words, a person is more likely to behave responsibly with

money in daily life if they have a better level of financial education and comprehension.

Everyone, needs to be financially literate so people can handle both their personal and

corporate finances. People that are financially literate have a higher chance of developing

their businesses and of obtaining outside investment (Andarsari & Ningtyas, 2019).

15
Furthermore, people with lower levels of financial literacy tend to make worse financial

judgments than people with higher levels of financial literacy. Given that a large portion

of the population lacks financial literacy and that victims of the subprime mortgage crisis

who were less financially savvy were frequently taken advantage of. Increased financial

understanding can definitely have a positive impact. Increased financial understanding

can definitely have a positive impact a significant part in lowering the possibility of

further financial disasters.

Furthermore, a higher degree of financial literacy among small business owners

helps their businesses function better, which together with the relatively low level of

financial literacy among entrepreneurs enhances the demand for financial education

(Matasy, 2010). With the help of sufficient program of financial education, it is expected

that financial literacy levels will rise, the likelihood that small business owners will face

financial difficulties as a result of within their control factors, such as excessive debt, will

decrease, and the proportion of small business owners who are merely employees of their

companies rather than becoming business leaders will be reduced (Fernandes, 2015).

Knowing the level of financial literacy of an individual has no exact key

measurement factors. However, researchers conducting a study to assess an individual’s

financial literacy have explored various factors such as savings, earnings, their

understanding in bank transactions, investment and loan decisions, response to economic

activities, knowledge of bookkeeping, recording business transactions, and etc. (Garg &

Singh, 2017). Consequently, financial literacy has derived its meaning through research

studies and findings based on the factors used by researchers.

16
 Lusimbo (2016) mentioned that financial literacy can be measured using debt

management literacy, budgeting literacy, investing literacy, and bookkeeping literacy.

Debt Management Literacy

The majority of governments in developed and developing economies are worried

about their citizens’ financial literacy. According to Cooperation and Development (Pisa,

2013), a number of factors, including the transfer of risk from governments and

employers to individuals as a result of the introduction of contributory pension to replace

the automatic pension and the increased use of contributory health schemes, have

contributed to the growing interest in financial literacy as a crucial life skill. All of these

trends have moved major financial decisions from institutions to individuals, which

necessitates that people be sufficiently financially literate to take the necessary

precautions to safeguard themselves from fraudulent schemes.

According to studies, those with lower financial literacy are more likely to

struggle with managing their debt, savings, and credit, and are less likely to save for the

future. In contrast, those with higher financial literacy are better at managing their

money, are more successful investors, choose mutual funds with lower fees, and can

participate in the stock market (Hilgert, Hogarth, & Beverly, 2003; Lusardi & Mitchell,

2011; FSD, 2009). Additionally, persons with more financial understanding are more

likely to amass larger sums of wealth, have better debt management techniques, and steer

clear of paying excessive interest rates (Lusardi & Mitchell, 2011; Wachira & Kihiu,

2012). Contrarily, those who lack financial literacy frequently borrow excessive amounts

of money and use generally more expensive sources of financing, which may have a

negative effect on their company’s performance. They are also more likely to report

17
having an excessive debt load or to be unable to calculate their debt load (FSD, 2009;

Master card, 2011).

Other than that, managing debt is also getting more and more attention by many

researchers (Nazni et al., 2012). According to Sullivan (1989), the debts problems begin

when an individual fails to handle his/ her accumulated debt that often increases steadily.

It is almost impossible for anyone to acquire a large sum of assets such as house and car

without resorting to loan. It is normal for an individual aged between thirty and forty to

have accumulated more debt than older people as they may attach to students loan,

mortgages, child expenses and etc. (Sophie, 2012). This may adversely affect young

worker’s financial well-being as a whole. Furthermore, debt management is one of the

key components that will make individual financial management in good shape (Chong et

al., 2010; Kim, 2000; Porter & Garman, 1993).

Budgeting Literacy

Clarkson and Wallace (2010) claimed that budgeting plays a significant role in the

performance of businesses. In particular, budgeting is a range of activities to predict the

financial needs of the business in the future. The budget is a detailed plan that offers

information on the acquisition and utilization of resources over a period of time (Rehman,

Mohamed and Ayoup, 2019). During the budgeting process, management is allocated the

estimated rate of revenue, cash flows and possible costs. Budgets are essential for SMEs

because they provide forward-looking information that encourages management

(Warrick, 2017). Budgets promote collaboration and alignment of various departments

within an organization to shared goals by offering a wider view of the desired target of a

SME (Muneer, Ahmad and Ali, 2017). Quantifying the target goals minimizes

18
uncertainty and provides a mutual view of the goals and thus promotes contact (Rehman,

Mohamed and Ayoup, 2019).

To evaluate employees’ efficiency and to reward positive outcomes to encourage

employees, budgets often provide a valuable measure (Muneer, Ahmad and Ali, 2017). In

the form of a business plan, budgeting is important. This is especially important for

SMEs because these businesses must provide compelling business strategies when they

collect funds, unlike their larger counterparts (Warrick, 2017). In general, SMEs have

few to no successful records and are therefore regarded by capital providers as high-risk

activities (Durst and Gerstlberger, 2021). Without such track record, SME decision-

makers must convincingly show that their organizations have a sound strategy and a

reasonable profit plan. Consequently, a clear and practical budget is an integral part of a

SME capital-raising business strategy (Warrick, 2017).

The objectives of SME budgets are to force decision-makers to follow a long-term

outlook, rather than distracting themselves by short-term daily activities which do not

impact a company’s long-term competitiveness and longevity (Muneer, Ahmad and Ali,

2017). Budgets also help to review profitability by helping SMEs decisions to define,

appreciate and concentrate on their companies’ most valuable products by maximizing

the distribution of resources (Arnold and Artz, 2019). In addition, the budgets enable

SME decision makers to predict their enterprises’ potential success and proactively shape

the future rather than depend upon their business environment developments.

Furthermore, they push SMEs decision-makers, rather than abstract generalizations

without commitment, to effectively forecast by translating their forecasts in specific

quantified plans (Arnold and Artz, 2019).

19
Banking Services Literacy

A 2020 study by KPMG on household savings found financial literacy to be an

important factor of the low rate, also explaining the lower investment rate. Further, the

country’s prosperity and its safety net are cited as reasons for low savings rates.

Moreover, the study stated the demographic distribution of the country to have a

noticeable impact on the overall household savings rate, as savings index should be

higher for countries in their early stage of the life-cycle hypothesis but still shows a

relatively lower savings rates despite a young population that is perhaps unconvinced of

the need of savings. Nevertheless, times of economic crises, as well as the pandemic,

have revived the significance of building and maintaining personal liquidity and therefore

reiterated the importance of embracing a savings culture.

Saudi Arabia has recognized the key role household savings play in the economic

development of the country, as it was formulated as a part of Vision 2030 and its

Financial Sector Development Program. One of the key objectives of the program is to

diversify the financial sector to support the development of the national economy and

stimulate savings. That said, the role of banks in promoting financial literacy and

enhancing savings culture cannot be emphasized enough. Since their inception,

commercial banks have directly or indirectly promoted savings by providing a range of

deposit products and mechanisms with varying combinations of liquidity and rate of

interest tailored to needs and preferences of different depositors. The additional benefit of

security from theft and damage, and in some cases robust insurance coverage has also

been contributive. As a store of value, bank deposits enjoy certain advantages over

tangible assets; deposits are convenient to hold as store of value and are safer and more

20
liquid – they can be converted into cash easily. They are also greatly divisible and often

less risky. However, despite these challenges, the extent of unbanked population, level of

financial literacy and consequently savings rate are still far from optimum.

For financial institutions to truly help consumers achieve financial health, most

experts believe that they must think of finance as a utility, a service that is continually

available to support people ‘s moment-by-moment needs, not isolated tools focused on

macro decisions. Many consumers are looking for tools or educational programs to

increase financial wellness. They are asking for help in understanding complicated

financial products. Accordingly, banks could consider offering awareness programs and

targeted seminars.

Book Keeping Literacy

Bookkeeping forms part of the accounting process (Kimmel et al. 2012) and it

entails recording and reporting the financial transactions or economic events of a business

(Flynn and Koornhof 2005; Bragg 2011; Christiaanse and Hulstijn 2013; Ajao et al.

2016; Rosen 2016). Previous studies indicate that there is a prevalent insufficient

bookkeeping practices within Small Business Enterprises (Bruwer and Watkins 2010;

Marivate 2014; Ajao et al. 2016; Ademola et al. 2017). Bookkeeping skills are a

prerequisite for bookkeeping practices and the completion of financial records, and small-

business owners require to have bookkeeping skills to be able to undertake bookkeeping

duties. Maseko and Manyani (2011) point out that some of the small-business owners

maintain records but fail to prepare financial records. The objective of this paper is to

analyse the bookkeeping skills small business owners in the clothing retail industry

possess to be able to undertake bookkeeping duties. For the purpose of this paper,

21
accounting and bookkeeping will be used interchangeably both referring to the process of

recording and maintaining business transactions.

Micro-entrepreneurs

According to Frenpong (2009), the crucial significance of micro-entrepreneurs as

suppliers of reasonably priced goods and services for the general public while also

producing a significant number of jobs. Low financial skills could have a negative effect

on the future of the business given how much micro-entrepreneurs have influenced

economic activity in the nation. Through careful and exact financial management of

micro-entrepreneurs themselves, this important role of micro-entrepreneurs can be

effectively exploited and preserved. According to Brown et. Al. (2006), financial literacy

is a fundamental component of successful business. Therefore, a strong financial

foundation is a key indicator of business success and growth for micro-entrepreneurs in a

cutthroat industry.

Business Growth

The term performance refers to the capacity to meet a given set of goals (Usama

and Yusoff, 2019 as cited by Richard et al., 2009). Therefore, the term “business

performance” refers to a company’s capacity to achieve intended results when compared

to intended outputs. In a more important note, business performance will be achieved

when an entrepreneur make sound decisions all throughout the business operations. As

cited by Eniola, (2015); Begonja et al., (2016) in the same research, business

performance also refers to an organization’s capacity to meet or exceed the pre-set

objectives or goals set by its investors over a specific time period, which enables the

22
organization to realize special or superfluous set goals relevant to the advancement of its

business in the market. Moreover, Rekarti and Doktoralina, (2017) stated that business

performance is a company’s potential to adapt to the business environment, along with

changes in the market environment that consist of customers, competitors and other

power forces that can change the way business works.

Firm performance is a focal phenomenon in business management. It has been

proposed in the literature (Barney, 2002). Performance can be characterized as the firm’s

ability to create acceptable outcomes and actions. Although performance seems to be

conceptualized, rationalized and measured in different ways, thus making cross-

comparison difficult. However in Khadijah Muhammad Usama and Wan Fauziah Wan

Yusoff (2019) research cited by Javed and Muhammad, (2011), mentioned that assessing

business performance is a better approach to explore whether a business enterprise is

progressing through the use of indicators which permits an easy way to look into the

enterprise situation such as the annual sale turnover rate, growth, number of employees,

innovation, competition and resources availability are among the widely used element for

measuring business performance.

Making sound financial decisions will help a business become successful and stay

that way, as well as establish it as a top-tier enterprise (Racaza, 2022). Priorities, models,

or alternatives designed to strengthen and maximize financial management in order to

achieve business performance are referred to as financial decision-making (Salazar,

Espinosa, & Soto, 2012). In addition, financial decision-making is a critical skill in the

workplace, which is especially important because efficient managers determine which

individual to hire, which supplier to purchase, or technique to employ (Omarli 2017). The

23
ability to make a good decision with accessible and reliable knowledge is critical because

money is involved in the majority of their decisions. Also, Kase (2011) claimed that it is

critical to make financial decisions in order to transfer or carry out a specific financial

action under different but specific circumstances Managers must therefore make financial

decisions on some issues that affect business sustainability.

In connection to that, Albastiki & Hamdan (2019) states that in order to be

successful as an entrepreneur/business’ owner, we must be able to make wise decisions

and judgments based on the circumstances. Having clear insights about the business

industry and how it works, business performance of a certain company is likely to be

positively productive.

Moreover, financial illiteracy and minority business failure is strongly correlated,

yet ultimately, owners are responsible for the success of minority small businesses. Lack

of information combined with bad financial or business management skills frequently

results in exclusion, which forces actions like using high-interest credit cards and payday

loans that are the opposite of good business practices. The minority business ownership

ratio will continue to lag behind other entrepreneur groups if minorities are not given

equal opportunities to acquire the financial and management skills required to establish

business success (Jackson, 2021). Business performance of MSMEs are measured using

businesses sales revenue growth, number of employees, and their assets (Lusimbo, 2016).

A growth of a business is primarily observed on its physical progress, specifically

the business’ net profit. However, many published researches revealed that in addition to

financial metrics, SMEs also employ other indicators. In Lusimbo’s (2016) study

24
business growth are measured using sales revenue, asset accumulation, and number of

employees as indicators.

Sales Revenue

As cited by Arcenildo et. Al. (2012), the most used indicators are the growth in

sales and cash flow indicator, indicating the trend to simplify the business control through

financial and market indicators. The business’ primary sources of income are measured

by sales revenue, according to a study conducted by Fuchs J. (2022). Sales revenue is

always the first metric listed on an income statement. It serves as an initial step in

calculating a company’s net income. Sales revenue, which is everyone’s favorite

accounting number, serves as the foundation for calculating net income, a key indicator

for evaluating a company’s health and making future plans. It is one of the key

performance indicators used in business analysis and forecasting.

Accumulated Assets

According to Investopedia team (2022), by working, saving, and investing money

over time, asset accumulation enables one to amass wealth. Asset accumulation refers to

assets that produce income. It can be calculated based on the overall value of all assets,

the income generated by the assets, or the evolution of the asset’s total worth through

time.

Number of Employees

According to Contributor C. (2020), productivity is inversely correlated with the

labor force. A business can take on more projects or execute them more quickly the more

individuals it has ready to work. On the other hand, firms are unable to finish projects if

25
there is not enough labor. Lack of productivity results in lower income and profit, which

in some situations makes it impossible for the business to remain open.

Moreover, it’s crucial for small firms to hire new personnel at the proper time. Cash

flow can dry up and profits can drop if a company hires someone too soon. However, if

the business waits too long to hire a new employee, the commitments may outstrip the

capability, which will result in a backlog of incomplete business. When there is enough

work to warrant hiring more personnel and the financial status is secure enough to handle

the added and additional expense of a new employee, hiring should take place. The first

thing to do when thinking about hiring new staff is to review the financial data for the

business. Pay close attention to the business’ revenue and how it has evolved over time.

On the other hand, it’s crucial to get onboard with new employees before a workforce

issue arises. If sales have been increasing continuously over the course of several months,

it’s a solid indication that the current staff is contributing effectively to the business’

great growth. To keep up the growth rate, this implies the need to expand the company by

adding more staff (https://www.freshbooks.com/hub/leadership/when-to-hire-new-

employees).

26
 Chapter 3

RESEARCH METHODOLOGY

This chapter presents the methodology employed in conducting this research. It is

primarily centered on discussing the research environment and the respondents of this

study, the instrument used in data gathering as well as the corresponding statistical

treatments which served as guide in interpreting the data with respect to the ethical

consideration observed in this study.

Research Method

The researchers employed the descriptive method of research utilizing a

questionnaire as its principal instrument of gathering data. Descriptive research method is

described as the characteristics of the population or phenomenon that is being studied.

This methodology focuses more on the “what” of the research subject rather than the

“why” of the research. In other words, the descriptive research method was primarily

focused on describing the nature of a demographic segment, without focusing on “why” a

certain phenomenon occurred. Furthermore, it “describes” the subject of the research,

without covering “why” it happened. The use of the descriptive method will be necessary

27
in order to know the level of financial literacy among micro-entrepreneurs and its effect

on the resulting performance of the business. Also, to know whether such socio-

demographic characteristics affect the level of financial literacy of micro-entrepreneurs.

The questionnaire will become the basis of any process, observation, description, and

documentation of the data gathered about the present study.

Research Environment

This study will be conducted in Dapitan City, Zamboanga del Norte. It has a land

area of approximately 39,050 hectares which was occupied by 85,202 residents as

determined by the 2020 Census from its 50 barangays, of which eight (8) barangays are

considered urban located at the oblación; Bagting, Banonong, Cawa-cawa, Dawo,

Linabo, Potol, Sta. Cruz, and Talisay; twenty-seven (27) are interior: Antipolo, Aseniero,

Ba-ao, Barcelona, Burgos, Dampalan, Daro, Diwaan, Hilltop, Ilaya, Kauswagan,

Larayan, Liyang, Ma. Cristina, Ma. Uray, Masidlakon, Opao, Owaon, and Oyan; thirteen

(13) are coastal areas: Banbanan, Baylimango, Canlucani, Carang, Guimputlan, Napo,

Oro, Polo, San Pedro, San Vicente, Sicayab-Bucana, Tag-ulo, and Taguilon; and two (2)

island barangays: Aliguay and Selinog.

Dapitan City known as “Shrine City of the Philippines” became a chartered city

by virtue of Republic Act No. 3811 which was signed by then President Diosdado

Macapagal on June 22, 1963, thus the first city of Zamboanga del Norte province. In

28
present, the city was governed by Gov. Rosalina Jalosjos together with the Dapitan Ciy

Mayor Seth Frederick P. Jalosjos.

29
 Figure 2. Map of Dapitan City
Source: https://www.google.com/maps/d/u/0/viewer?mid=1PivfYnmdHnL8NQLNdNqy-cQL-9
s&hl=en_US&ll=8.636899090870342%2C123.4190105139218&z=11

Respondents of the Study

There were roughly 1,023 microbusinesses owners registered in the City of

Dapitan for the year 2021 based on the list of the Business Permit and Licensing Office.

The target respondents of the study will be the micro-entrepreneurs of Dapitan City,

particularly microbusinesses at the following barangay: Bagting, Dawo, Sta. Cruz,

Banonong, and Tambak. There should only be 10 respondents per barangay. The sample

respondents will be given questionnaires to be answered respectively.

30
Table 1. Respondent’s Distribution

Barangay Number of Respondents

Bagting 10

Dawo 10

Banonong 10

Tambak 10

Sta. Cruz 10

TOTAL 50

Research Instruments

An adaptive questionnaire will be used by the researchers in gathering data to

found out relevant answers to the research questions formulated. The validity, reliability

and relatedness of the instrument will be reviewed and verified by the adviser, course

instructor and other experts in such field. The same questionnaire will be administered by

testing it with ten (10) micro-entrepreneurs. The questionnaire will be in a checklist form

that will present the preferable information sources administered to the respondents in

seeking information. It will contain two (2) parts, the first part calls for the profile of the

respondents. The second part calls for the financial literacy measure of micro-

entrepreneurs and their business performance.

Validating the Instruments

Validity of instrument particularly measures the extent to which it claims what it

intends to measure. To ensure the questionnaire’s validity, the researchers conducted a

31
content validity test by seeking the opinions of the subject matter experts in the field of

study. Their suggestions and comments are applied to the revisions of the instrument to

make sure it was organized, precise, and reliable. For a research instrument to be valid,

the statement chosen and included in the questionnaire are factual and pertinent to the

variable being investigated. Furthermore, statements of every factor of financial literacy

that are considered irrelevant or did not meet the required percentage were removed.

Reliability of the Instruments

Reliability indicates that the questionnaire is consistently producing the same

results throughout various tests. After the instruments are validated by subject matter

experts and formulated the final questionnaire output, the researchers conducted a pilot

testing that is administered to the ten (10) selected micro-entrepreneurs of Dipolog City,

Zamboanga del Norte to ascertain the reliability of our questionnaire. The research

instrument was measured using the Cronbach Alpha for reliability test. To pass the

reliability test using Cronbach Alpha, the result must reach at least 70%.

Table 2. Pilot Testing of Variables using Cronbach’s Alpha

Variables Cronbach Alpha Value Percentage

Debt Management Literacy 0.8332 83.32%

Budgeting Literacy 0.9365 93.65%

Banking Services Literacy 0.9078 90.78%

Bookkeeping Literacy 0.9046 90.46%

32
Data Gathering Procedure

The researchers will personally distribute the questionnaires to the selected

respondents by employing a drop-off method of distribution. Nevertheless, the

researchers asked permission from the micro-entrepreneurs to be part of the research

process by presenting a letter for the respondents. Then, questionnaires were given to the

respondents upon their approval to participate in the data gathering. The respondents are

expected to answer the handed questionnaire thoroughly and honestly. Moreover, an

informal interview will be employed to the identified respondents to clarify their answers.

Afterwards, the given questionnaires were retrieved and analyzed by tallying the data and

information needed in the study. Lastly, after verifying their answers the gathered data

will undergo further statistical treatment with the used of Microsoft Excel.

Statistical Treatment

To determine the results of the study, it will be tallied and tabulated. After the

instruments have been collected from the respondents, the data gathered will be treated

using the following statistical tools.

Ethical Consideration. The study has ethical consideration that can be seen in the

process of gathering data, presenting theories, related literature, and studies. Thus, the

researchers made sure that the authors of information collected in every chapter of details

were cited and credited appropriately. Additionally, in the questionnaire presented in the

current investigation portrays confidentiality, privacy, and freedom of the respondents to

express themselves that are highly respected by the researchers together with the ethical

principle of discussing the gathered data. The resultant of the investigation lays factuality

33
 of the overall content of the research and would be exceptionally used for research

purposes and future investigation.

Frequency Counting and Percentage will be used to determine the profile, i.e, age, sex,

years of operation, and business type of the respondents. The formula is:

Percentage = (part/whole) X 100

Weighted Mean will be used to determine the level of financial literacy of micro-

entrepreneurs in relation to their business performance. The formula is:

Weighted mean = (data interval frequency x assigned weight)/Total respondents

Hence, the levels of satisfaction by weighted mean are five points scaled with the following

descriptive equivalent are as follows:

Scale Range of Values Descriptive Equivalent

5 4.21-5.00 Excellent knowledge

4 3.41-4.20 Good knowledge

3 2.61-3.40 Fair Knowledge

2 1.81-2.60 Poor knowledge

1 1.00-1.80 No knowledge

Chi-squared Test will be used to establish whether there is a significant relationship

between the level of financial literacy of the respondents and their business performance.

❑
(Oi−E i)
x 2= ∑
❑ Ei

34
where:

Oi=observed value

Ei =expected value

35
 Chapter 4
PRESENTATION, ANALYSIS, AND INTERPRETATION OF DATA

This chapter presents the data gathered from fifty (50) micro-entrepreneurs in Dapitan

City to assess their financial literacy level in relation to their business growth. The responses of

the selected respondents were treated statistically in order to answer the statement of the

problem.

Gender of the Respondents

From the analysis of the respondents’ gender, majority of the micro-entrepreneurs are

female (72%) while male represented 28% as shown in the Table 3. This indicates that the

research’s respondents are female dominated.

Table 3 Respondents’ Profile in terms of Gender

Gender f Percent (%)

Male 14 28

Female 36 72

Total 50 100

Age of the Respondents

Majority of the respondents indicated that they were between 26 – 35 years old which is

24%, 22% were between 45 – 55 years, 20% were between 36 – 45 years, 18% were above 55

years and 16% were between 18 – 25 years. This implies that majority of the microbusiness

owners are in the adult’s bracket of 26 – 35 years as shown in the Table 4.

36
Table 4 Respondents’ Profile in terms of Age

Age Bracket f Percent (%)

18 – 25 years old 8 16

26 – 35 years old 12 24

36 – 45 years old 10 20

45 – 55 years old 11 22

Above 55 years old 9 18

Total 50 100

Educational Attainment

The analysis established that majority of the micro-entrepreneurs had College education

level which constituted 78% of the total respondents, 20% had Secondary education and 2% had

finished TESDA/ALS education. This implies that most of the respondents in the research

environment area totaling 22% had less than College education.

Table 5 Respondents’ Profile in terms of Educational Attainment

Educational Attainment f Percent (%)

None 0 0

Primary 0 0

Secondary 10 20

College 39 78

TESDA/ALS 1 2

Total 50 100

37
Nature of Business

The result of the analysis shows that majority of the respondents are in Retail/Wholesale

business which is 62%, 34% in Service business and 4% in Manufacturing as shown in Table 6.

This implies that majority of microbusinesses operating in Dapitan City are retail and wholesale

traders.

Table 6 Respondents’ Profile in terms of Nature of Business

Nature of Business f Percent (%)

Manufacturing 2 4

Retail/Wholesale 31 62

Service 17 34

Agribusiness 0 0

Others 0 0

Total 50 100

Years of Operation

The analysis revealed that majority of the business have been operating for 0 – 5 years

already which constituted 54% of the total respondents, second on the rank were operating

within 6 – 10 years which constituted 26% of the total respondents, third on the rank constituted

10% of the total respondents that operates within 11 -15 years, fourth on the rank constituted 8%

of the total respondents that operates within 16 – 20 years and 2% for above 20 years as shown

in Table 7. The result indicates that there is a low rate of transition of microbusinesses to the next

level of growth.

38
Table 7 Respondents’ Profile in terms of Years of Operation

Years of Operation f Percent (%)

0–5 27 54

6 – 10 13 26

11 – 15 5 10

16 – 20 4 8

Above 20 years 1 2

Total 50 100

Debt Management Literacy

The Table 8 below contains the findings of the level of financial literacy among micro-

entrepreneurs in terms of debt management literacy. The statement “I can repay the loan

installments on time” owns the resulting mean of 4.42 which is verbally interpreted as excellent

knowledge. Followed by the statements “I can determine the total debt position of the business to

date” and “I can understand inflation effects and interest rates on the loans borrowed for the

business operation” which has a resulting mean of 4.37 and 4.30 respectively, interpreted

verbally as excellent knowledge. The last statement that is verbally interpreted as good

knowledge with a resulting mean of 4.16 is “I can compare the terms and conditions on various

finances before availing the services for the business”. This implies that most of the micro-

entrepreneurs can handle their debt diligently and are cautious of the debt deadlines, rates,

effects, and the terms and conditions associated.

39
Table 8 Financial Literacy Level in terms of Debt Management Literacy

Statements WM Description

1. I can repay the loan installments on time. 4.42 Excellent

knowledge

2. I can compare the terms and conditions on various 4.16 Good

finances before availing the services for the business. knowledge

3. I can understand inflation effects and interest rates on 4.30 Excellent

the loans borrowed for the business operation. knowledge

4. I can determine the total debt position of the business to 4.37 Excellent
date. knowledge

Average Weighted Mean 4.31 Excellent

knowledge

Budgeting Literacy

Table 9 shows the findings of the data analyzed about the level of financial literacy

among micro-entrepreneurs in terms of budgeting literacy. The statements “I can prepare a

budget plan to track spending in the business”, “I can make a budget plan to set performance

targets for the employees”, “I can prepare a written annual budget of income and expenditure for

the business”, and “I can prepare written financial planning of what I want to achieve in a year of

the business” which has the resulting mean 3.90, 3.84, 3.80 and 3.78 respectively are interpreted

as good knowledge. This implies that most of the respondents are literate enough to make budget

plans for the business and its employees.

40
Table 9 Financial Literacy Level in terms of Budgeting Literacy

Statements WM Description

1. I can prepare written financial planning of what I want 3.78 Good

to achieve in a year of the business. knowledge

2. I can prepare a written annual budget of income and 3.80 Good

expenditure for the business. knowledge

3. I can make a budget plan to set performance targets for 3.84 Good
the employees. knowledge

4. I can prepare a budget plan to track spending in the 3.90 Good

business. knowledge

Average Weighted Mean 3.83 Good

knowledge

Banking Services Literacy

The Table 10 reveals the findings of micro-entrepreneurs’ level of financial literacy in

terms of banking services literacy. The statements are verbally interpreted as good knowledge

from the range of values 3.41 – 4.20 on the following situations: “I know how to operate a bank

account for the business”, “I know the requirements of banks in lending money to

microbusiness”, “I know where to go when the business needs extra finances”, and “I can access

other banks products (e.g., credit cards, bill payment service, and fixed deposit) for the business

other than loans” with a resulting mean of 4.16, 4.16, 4.00, and 3.68 respectively. This implies

that most of the respondents are knowledgeable enough on how to access banking services

offered.

41
Table 10 Financial Literacy Level in terms of Banking Services Literacy

Statements WM Description

1. I know how to operate a bank account for the business. 4.16 Good
knowledge

2. I know where to go when the business needs extra 4.00 Good

finances. knowledge

3. I know the requirements of banks in lending money to 4.16 Good

microbusiness. knowledge

4. I can access other banks products (e.g., credit cards, bill 3.68 Good
payment service, and fixed deposit) for the business knowledge
other than loans.

Average Weighted Mean 4.00 Good

knowledge

Bookkeeping Literacy

The findings of the level of financial literacy among micro-entrepreneurs in terms

bookkeeping literacy are presented below on Table 11. From the analysis of data, the statement

“I can prepare tax remittance documents” which has a resulting mean of 4.35 is verbally

interpreted as excellent knowledge. While the statements “I can prepare financial statements for

my business. (Income statement and balance sheet)”, “I can maintain and balance the ledger

book accurately”, and “I have an adequate knowledge of maintenance of a cashbook” with

resulting mean of 4.00, 3.75 and 3.62 respectively are interpreted as good knowledge. This

implies that most of the micro-entrepreneurs have knowledge on bookkeeping to record their

daily transactions.

42
Table 11 Financial Literacy Level in terms of Bookkeeping Literacy

Statements WM Description

1. I can prepare financial statements for my business. 4.00 Good

(Income statement and balance sheet) knowledge

2. I can prepare tax remittance documents. 4.35 Excellent

knowledge

3. I have an adequate knowledge of maintenance of a 3.62 Good

cashbook. knowledge

4. I can maintain and balance the ledger book accurately. 3.75 Good
knowledge

Average Weighted Mean 3.93 Good

knowledge

43
44
45
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December 5, 2022

ANA FLOR C. ADRIAS

Instructor – Accounting Research
College of Business Administration

Subject: ENDORSEMENT FOR PROPOSAL DEFENSE

Dear Ms. Adrias:

This is to formally recommend the following students to conduct their proposal defense for their
thesis.

Student Thesis Proposal Title

AL-OS, APRIL MAE M.
LAGE, JELA C. Assessment of the Level of Financial Literacy
MANABA, MAY JISAPER C. Among Micro-entrepreneurs in Relation to
TAMIROY, KIM LESTER T. Their Business Growth
VILLARIN, RHEZE MELCAH P.

This is to also certify that the group has consulted with the undersigned for the necessary
improvement of their paper.

Truly yours,

JAY A. ROSLINDA
Paper Adviser

Appendix B

51
 Questionnaire for Micro-entrepreneurs

Dear respondents, this questionnaire aims at collecting information to help determine the

relationship between financial literacy and the growth of microbusinesses in Dapitan

City. This questionnaire is adaptive form the study of Lusimbo (2016) entitled

“Relationship Between Financial Literacy and the Growth of Micro and Small

Enterprises in Kenya: A Case of Kakamega Central Sub-County”. The information given

is for academic purpose only and will be treated as very confidential. Please fill the

questions according to the instructions given.

PART I. Respondents Profile (Tick the option of your choice)

1. Gender: __ Male __ Female

2. Age: __ 18-25 __ 26-35 __ 36-45 __45-55 __ above 55

3. Educational Attainment:

__ None

Primary Secondary College TESDA/ALS

Graduate

Undergraduate

4. Nature of Business:

__ Manufacturing __ Retail/Wholesale __ Service

__ Agribusiness __ Others (specify) …………………….

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 5. Years of Operation:

___ 0-5 ___ 16-20

___ 6-10 ___ Above21

___11-15

PART II. Financial Literacy and Business Growth Measures

Instruction: For letter B-E evaluate your knowledge and skills based on the rating scale

presented below.

Scale Descriptive Equivalent

5 Excellent knowledge

4 Good knowledge

3 Fair knowledge

2 Poor knowledge

1 No knowledge

A. Debt Management Literacy

S/no Statements 5 4 3 2 1
1. I can repay the loan installments on time.
2. I can compare the terms and conditions on various
finances before availing the services for the
business.
3. I can understand inflation effects and interest rates
on the loans borrowed for the business operation.
4. I can determine the total debt position of the
business to date.

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B. Budgeting Literacy

S/no Statements 5 4 3 2 1
1. I can prepare written financial planning of what I
want to achieve in a year for the business.
2. I can prepare a written annual budget of income
and expenditure for the business.
4. I can make a budget plan to set performance targets
for the employees.
5. I can prepare a budget plan to track spending in the
business.

C. Banking Service Literacy

S/no Statements 5 4 3 2 1
1. I know how to operate a bank account for the
business.
2. I know where to go when the business needs extra
finances.
3. I know the requirements of banks in lending money
to microbusiness.
4. I can access other bank products (e.g credit cards,
bill payment service, and fixed deposit) for the
business other than loans.

D. Book Keeping Literacy

S/no Statements 5 4 3 2 1
1. I can prepare financial statements for your
business. (Income statement and balance sheet)
2. I can prepare tax remittance documents.
3. I have an adequate knowledge of maintenance of a
cashbook.
4. Ability to maintain and balance the ledger book
accurately.

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E. Measuring Business Growth

1. Check the appropriate column for the total value of assets in your business for the

past five (5) years.

Amount in pesos

P50,000 P51,000 - P101,000 - P151,000 – P201,000

and below 100,000 150,000 200,000 and above

Year

2. How many permanent employees do you have for the past five years?

Number of Employees

Year

55
3. Can you please check what is your sales revenue for the last five (5) years.

Amount in pesos

P50,000 P51,000 - P101,000 - P151,000 – P201,000

and below 100,000 150,000 200,000 and above

Year

56
 Appendix C
Curriculum Vitae
Personal Background
Name : April Mae M. Al-os
Address : Purok Tonggo, Minaog, Dipolog City
Date of Birth : April 3, 2001
Place of Birth : Sergio Osmeña Sr.
Sex : Female
Civil Status : Single
Height : 5’2
Weight : 40 kg
Religion : Roman Catholic
Citizenship : Filipino
Father’s Name : Ronaldo M. Al-os
Occupation : Farmer
Address : Purok Tonggo, Minaog, Dipolog City
Mother’s Name : Juliet M. Al-os
Occupation : Dressmaker

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Address : Purok Tonggo, Minaog, Dipolog City

Educational Background
Elementary : Sicayab Elementary School 2013-2014
Junior High School : Sicayab National High School 2017-2018
Senior High School : Jose Rizal Memorial State University 2019-2020
College : Jose Rizal Memorial State University

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 Appendix C
Curriculum Vitae
Personal Background
Name : Jela C. Lage
Address : Brgy. Nangcaan, Rizal, Zamboanga del Norte
Date of Birth : November 2, 2001
Place of Birth : Dr. Jose Rizal Memorial Hospital, Dapitan City
Sex : Female
Civil Status : Single
Height : 5’3
Weight : 55 kg
Religion : Seventh-Day Adventist
Citizenship : Filipino
Father’s Name : Jesus B. Lage
Occupation : Retired Government Worker
Address : Brgy. Nangcaan, Rizal, Zamboanga del Norte
Mother’s Name : Laxie C. Lage
Occupation : Housewife
Address : Brgy. Nangcaan, Rizal, Zamboanga del Norte

Educational Background
Elementary : Rizal Central School 2013-2014
Junior High School : Rizal National High School 2017-2018
Senior High School : Rizal National High School 2019-2020
College : Jose Rizal Memorial State University

59
 Appendix C
Curriculum Vitae
Personal Background
Name : May Jisaper C. Manaba
Address : Patawag, Labason, Zamboanga del Norte
Date of Birth : May 15, 2002
Place of Birth : Patawag, Labason, Zamboanga del Norte
Sex : Female
Civil Status : Single
Height : 5’0
Weight : 50 kg
Religion : Roman Catholic
Citizenship : Filipino
Father’s Name : Jimmy F. Manaba Sr.
Occupation : Teacher
Address : Patawag, Labason, Zamboanga del Norte

Mother’s Name : Peregrina C. Manaba

Occupation : Teacher
Address : Patawag, Labason, Zamboanga del Norte

Educational Background
Elementary : Patawag Elementary School 2013-2014
Junior High School : Saint Mary's College of Labason 2017-2018
Senior High School : Ave Maria College 2019-2020
College : Jose Rizal Memorial State University

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 Appendix C
Curriculum Vitae
Personal Background
Name : Kim Lester T. Tamiroy
Address : Purok 3, Clarin, Plaridel, Misamis Occidental
Date of Birth : December 01, 2002
Place of Birth : Tarlac City
Sex : Male
Civil Status : Single
Height : 5’7
Weight : 65 kg
Religion : Roman Catholic
Citizenship : Filipino
Father’s Name : Crommwel Tamiroy
Occupation : Farmer
Address : Purok 3, Clarin, Plaridel, Misamis Occidental

Mother’s Name : Leonora Tamiroy

Occupation : Housewife
Address : Purok 3, Clarin, Plaridel, Misamis Occidental

Educational Background
Elementary : Clarin Elementary School 2013-2014
Junior High School : Looc National High School 2017-2018
Senior High School : Looc National High School 2019-2020
College : Jose Rizal Memorial State University

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 Appendix C
Curriculum Vitae
Personal Background
Name : Rheze Melcah P. Villarin
Address : Motibot Sindangan, Zamboanga del Norte
Date of Birth : November 14, 2001
Place of Birth : Motibot Sindangan, Zamboanga del Norte
Sex : Female
Civil Status : Single
Height : 5’5
Weight : 71 kg
Religion : Roman Catholic
Citizenship : Filipino
Father’s Name : Rogeldo Villarin
Occupation : Electrician
Address : Motibot Sindangan, Zamboanga del Norte

Mother’s Name : Mely Villarin

Occupation : Housewife
Address : Motibot Sindangan, Zamboanga del Norte

Educational Background
Elementary : Motibot Elementary School 2013-2014
Junior High School : Siari John H. Roemer Memorial National High School 2017-2018
Senior High School : Siari John H. Roemer Memorial National High School 2019-2020
College : Jose Rizal Memorial State University

62