Abstract:
The direct effect of access to finance on the growth of Small and Medium Enterprises (SMEs) run by entrepreneurs
is well studied. However, there is limited understanding on the difference in the rate of entrepreneurship growth across
a nation. Further, the empirical findings relating to the financial literacy of entrepreneurs significantly differ across
different geographic communities. Thus, the purpose of this study is to examine the impact of financial literacy on
the access to finance and the business growth of the SME Sector in the Northern Province of Sri Lanka in the postcivil
war context, as SMEs promote resilience of communities to recover from adversities such as civil war. The
Indebtedness of Northern Province has suddenly increased, as there is a sharp growth is evident in the average debt
per family in the post-civil war context. Thus, demonstrating the lack of proper financial literacy and the discipline
required to be financially stable, which is a crucial benchmark for a successful business. According to the model of
ambidextrous management in entrepreneurial growth companies, entrepreneurship is process where the
entrepreneurial orientation turns into implementation and thereby leads to the business growth. However, the effect
of access to finance to the entrepreneurs and the impact of financial literacy of the entrepreneur on this relationship
is not examined. Thus, this study incorporates the effect of access to finance and the moderating effect of financial
literacy to the existing model. It was evident from this study that, access to finance has a direct impact on the growth
of the SMEs in the Northern Province of Sri Lanka. The results also reflect that the financial literacy and ability to
make the financial decisions influence access to finance, resulting in business growth.
