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Financial management practices and Agri-SME performance: does subjective financial literacy hold the key?
(Taylor & Francis Online, 2026-01-10) Mang’ana, Kulwa
this study investigates how four key financial management practices (FMps), namelythe working capital, capital budgeting, financial reporting, and financing affect agri-sMEperformance in tanzania, focusing on the mediating role of the manager’s subjectivefinancial literacy (self-perceived competence). using a cross-sectional survey of 385tanzanian agri-sME managers, data were analyzed via pls-sEM with 5,000 bootstraps.anchored in the resource Based view and behavioral finance, results show thatfinancing practices (β ≈ 0.17) and subjective literacy (β ≈ 0.13) significantly enhanceperformance (p < 0.05). Furthermore, working capital management and capital budgetingsignificantly boosted subjective literacy (p < 0.05). importantly, financial reportingsignificantly reduced perceived competence (β≈−0.23, p < 0.05), suggesting potentialcognitive misalignment. indirect paths via literacy were positive but not statisticallysignificant (p > 0.05). the study recommended that support programs must pair accessto finance with capability building that bolsters perceived financial competence, andreporting tools must be simplified.