Financial Literacy and Business Performance: Evidence from Rural Female Micro-Entrepreneurs in Khorezm, Uzbekistan

Abstract

This study examines how distinct dimensions of financial literacy relate to the business performance of rural female micro-entrepreneurs in a transition economy. Drawing on the Resource-Based View, Human Capital Theory, and Entrepreneurial Capability Theory, financial literacy is conceptualized as four separable capabilities: financial education, cash forecasting, bookkeeping practice, and financial self-efficacy. Survey data were collected from 200 women micro-entrepreneurs sampled at random in Shovot District, Khorezm region, Uzbekistan, and 173 usable responses were analysed with partial least squares structural equation modelling (PLS-SEM). After validation and refinement of the measurement model, the results show that bookkeeping practice (β = 0.407) and financial education (β = 0.294) are positively and significantly associated with business performance, as is financial self-efficacy (β = 0.155), whereas cash forecasting shows no significant unique association. The findings are robust to alternative construct and outcome specifications and to endogeneity checks, and they suggest that, where formal financial infrastructure is thin, record-keeping and foundational financial knowledge appear to be the capabilities most closely associated with micro-enterprise performance; because the measurement model was refined on these data, these associations are exploratory and await confirmation on independent samples.