The level of financial literacy to Profitability of Business owner

in Biñan Public Market

INTRODUCTION

The capacity to grasp how money functions is referred to as

"financial literacy." It is the means by which one acquires expertise in the
administration of financial matters and knowledge of many aspects of
insurance, investment, and general money management. Individuals are able
to make effective and sound financial decisions with confidence when they
have the skills and understanding that allow them to do so, as well as
efficiently manage their personal wealth and increase their financial
competence to demand better financial services. These abilities and
understandings can be summed up as "financial competence." Numerous
studies provide credence to the idea that having a solid understanding of
finances is essential to the achievement of commercial success. A lack of
financial expertise has a negative effect on the company's future and can be
detrimental to its success. As a result, those who own businesses ought to
abide by the basic idea of good business by acquiring financial literacy; this is
because good business is the path to competitiveness in the modern, worldwide
community.

Numerous studies and surveys conducted in the Philippines

with the aim of assessing the level of financial literacy among the public
produced essentially identical findings: the vast majority of Filipinos have no
firm grasp on how to properly handle their finances. S&P, an international
credit rating firm that also performs financial research, was the organization
that was responsible for one of these surveys. According to the findings of a
study that was hailed as the "most complete measurement of global financial
literacy to date," the Philippines placed in the lowest 30 of the 144 countries
that were investigated for this study. Only 25 percent of adult Filipinos are
financially educated, making it one of the lowest rates in the world. The results
of the survey showed that the financial literacy rate of Filipinos was just 25%,
which was lower than the rates of their neighbors in Southeast Asia.

A strong understanding of finances, in addition to other

aspects of business, is required for the successful operation of a company. In
today's world, having a solid financial strategy is really necessary. On the other
side, inadequate management is the leading cause of failure in newly
established businesses, with a lack of cash coming in a close second. A solid
financial strategy makes it easier to build a business and gives you more
control over its finances. Even if there is an excellent opportunity in the
market, a company might still fail if it does not have a financial plan and
engages in bad financial practices. There is not a great deal of information
available on them, according to the findings obtained from the National
Economic Development Authority (NEDA) and the Department of Trade and
Industry (DTI). But it is generally known that a lack of financial management
skills is one of the most significant challenges that microbusinesses need to
solve in order to successfully conduct their operations. This is one of the
primary challenges that microbusinesses face. But much like every other sector
of the economy, the micro There are difficulties to be found in the commercial
sector.

The purpose of this study is to help improve financial literacy

among owners of microbusinesses and young people who aspire to be
entrepreneurs and want to start microbusinesses. This will be accomplished by
bringing to the participants' attention the significance of possessing financial
literacy while running a business, thereby filling a gap in the existing body of
research. Because effective financial management is essential to the growth,
continuity, and prosperity of all kinds of microenterprises, it has a favorable
impact on one's capacity to make sound financial decisions, as well as on the
well-being of households and the continued existence of businesses. It is
important to note that small businesses make up the great majority of
establishments present in the economy and are responsible for the employment
of a sizeable section of the labor force. Studies on small businesses have also
found a direct link between financial literacy and how well a business does and
how much it grows.
 BACKGROUND OF THE STUDY

Microbusinesses make up a sizeable portion of the Philippines'

substantial informal economic sector. Many of these are tiny vendors who
operate in public markets and have extremely limited access to resources; their
ability to remain in business is highly dependent on having access to funding.
In most cases, this also comes from the informal sector in the form of informal
financiers known as "5-6." There are two main sorts of 6-person financiers that
may be found in Philippine public markets: Filipinos and Indians. Each of
these financiers has their own unique method of lending. They frequently
borrow money from moneylenders on a daily or weekly basis at excessive
interest rates. This is because moneylenders are their primary source of
working capital. As a direct consequence of this, the vast majority of vendors
are back in debt within a period of six weeks, and two years later, the chance
and volume of borrowing at high interest rates grows.

The daily collection of payments is handled by five or six different

moneylenders at the Biñan Public market, and it can take place in the
morning, the afternoon, or both. The total amount borrowed by a customer, in
addition to their nominal interest rate of 20%, is summed up and then divided
by the length of their credit line to arrive at their daily payment amount. The
terms of the loan are flexible, so if a client misses a payment one day, it is
assumed that they will make up for it the following time they make a payment.
Due to a lack of cash, the majority of microentrepreneurs borrow money from
informal lenders in order to establish their business or to sustain the day-to-
day activities of their business. In most cases, the interest rates that informal
money lenders charged were far greater than those offered by banks and other
legal lending organizations. Their victims are always the owners of
microbusinesses and small vendors who either do not meet the requirements to
borrow from banks or who discover that lending money to a legal entity is a
highly complicated process.
 This study focused on the proprietors of microb usinesses in the
Philippines and the informal financiers in Biñan Public Market who serve them
in the hull-hectare public market that is located in the upper part of Biñan
Public Market. The microbusinesses in the Philippines engage in a wide variety
of business activities. Even though there are formal funding organizations
available, such as cooperatives, lending investors, and rural banks,
microentrepreneurs typically do not employ these types of institutions. In
addition, the market is home to a number of pawnshops, the majority of whose
clientele consists of local residents and employees of nearby businesses.
Regarding sources of working capital, one option that comes to mind for me is
the proprietors of microbusinesses that rely on the money generated by their
own companies as well as on informal lenders.

SCOPE AND LIMITATION

The purpose of this study was to determine the level of financial

literacy among owners of microbusinesses, the attitude of owners of
microbusinesses toward profitability, and the effectiveness of financial literacy
in increasing the profitability of microbusinesses. The focus of the study was
restricted to the selected sample size of one hundred owners of
microbusinesses that were located within the Biñan Public Market.

There may be some possible limitations in this study. The study is

based on specific concepts and studies wherein the lack of previous research
studies and
insufficient sample size on the topic may be a struggle in developing the
research
paper. The study may hinder its development because of the insufficient
number
of samples; A large or sufficient sample size is necessary in order to conclude a
valid and precise research result. In addition, the lack of previous studies may
also bring difficulty in providing a basis of literature reviews that provides
information. Referencing prior research studies is essential in a research paper
as a basis of literature review that includes information for the entire research
study. Considering the fact, we can fill the gaps in our research by finding
more related studies and start managing the sample and methods on how to
develop the entire research study

HYPOTHESIS

Based on the problems presented in the study, the hypotheses were formulated
and stated as follows:

Ho: There is no significant relationship (correlation) between the level

Financial Literacy and profitability.

Ha: There is a significant relationship (correlation) between the level Financial

Literacy and profitability.
 CHAPTER 3

METHODOLOGY

This chapter discusses the research design and sources of data as

well as the population of the study, instrumentation and validation, evaluation
and scoring, data gathering procedures, treatment and analysis of data, and
ethical considerations.

Research Design

A descriptive-correlational research design was used. This design

describes the degree to which quantitative variables are related. In the current
study, it was used to explore to what extent the microbusiness owners’
financial literacy relates to financial knowledge, financial attitude, and
financial behavior and whether such sociodemographic characteristics of
microbusiness owners have a significant relationship with their level of
financial literacy.

A descriptive correlational design would be appropriate for the study

because there will be no intervention before, during, or after data collection.
The data will also be collected at one general point in time. Quantitative
analysis is an appropriate approach for the study since the variables and a
simple association are investigated through statistical analysis. The ideal
sampling procedure for the design would be random sampling. However, due to
the COVID-19 regulations, it is a challenge to collect data randomly. Therefore,
the sampling procedure to be utilized is convenience sampling since the
researchers cannot reach out to every essential worker in the locale.

Statistical treatment of data

After gathering all of the needed information and the answers from the
survey, the researchers will check, sort, organize, and tabulate them. The
responses are subjected to statistical methods in order to answer the research
statement about the problems. The following statistical tools will be used in the
study: frequency, weighted mean, and Pearson R. The frequency (f) allows the
researcher to have a glance at the entire data conveniently. It shows whether
the observations are high or low, and also whether they are concentrated in
one area or spread out across the entire scale. The researcher also uses a
weighted average to calculate the average value of the data. And lastly, the
researcher also utilizes Pearson R, which is a technique for investigating the
relationship between two quantitative, continuous variables (University of the
West of England, Bristol, 2020). By applying Pearson, the researcher was able
to measure the significant relationship between the level of financial literacy
and profitability.