Abstract

Objectives: To examine the moderating influence of financial literacy on the relationship between microfinance banks services and survival of small business in Nigeria.

Methods/Statistical Analysis: As a theoretical review, the paper adopts financial literacy theory and contingency theory to develop a conceptual framework that explains the moderating influence of financial literacy on the relationship between microfinance banks and small business survival within the context of Nigerian small business sector.

Findings: Adequate, affordable and sustainable financial and non-financial services provided by microfinance banks are presumed to ensure survival of small businesses. However, these services can only be useful where the small business owners are exposed to high financial literacy. High level of financial literacy has the potential to influence profitability and reduce the risk of failure in small businesses sector. Conversely, it is presumed that poor financial literacy will reduce profitability and in turn may reduce the survival potential of small business.

Applications/Improvements: Microfinance banks services are needed to enhance the long-term survival of small business in Nigeria. The financial and non-financial services provided by microfinance banks, utilized properly, can effectively reduce the failure risk of small businesses.

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