Which Financial Literacy Skills Matter Most? Evidence From Small Enterprises Investment Decisions.

In today’s complex economic environment, financial literacy is a critical determinant of effective investment decisions, particularly for small enterprises (SEs). Despite the recognized importance of financial literacy in shaping business decision - making, limited empirical attention has been given to identifying which specific financial literacy skills most strongly influence investment decisions among small enterprises in Sri Lanka. This study examines that which financial literacy skill has most influential capability on investment decisions among small enterprises in Sri Lanka, analyzing financial literacy through five dimensions such as: Financial Planning, Fixed Assets Management, Investment Knowledge, Budgeting Knowledge, and Financial Record Keeping. Data were collected from 100 small enterprises owners through structured questionnaires and analyzed using mainly multiple regression techniques. The results reveal Investment Evaluation Knowledge (p < 0.05; β = 0.122) and Financial Record-Keeping (p < 0.05; β = 0.257) were found to have a significant positive impact on investment decisions. In contrast, Financial Planning (p > 0.05; β = -0.026), Fixed Assets Management (p > 0.05; β = 0.064), and Budgeting Knowledge (p > 0.05; β = 0.014) were not statistically significant predictors of investment decision-making. The findings demonstrate that financial literacy is a critical determinant of investment performance among enterprise owners, with financial record- keeping competence and investment evaluation skills emerging as the most influential factors in optimizing investment outcomes. The study highlights the importance of targeted training programs and professional consultation to strengthen their financial capabilities and supports policymakers in developing initiatives to enhance Financial Literacy of the sector.