FINANCIAL RISK MANAGEMENT AS PREDICTOR OF SMALL AND MEDIUM ENTERPRISES SUSTAINABILITY IN SOUTHWEST, NIGERIA.
Keywords:
Financial risk management, SMEs, SustainabilityAbstract
This paper investigates financial risk management as predictor of SMEs sustainability in Southwest Nigeria. Four research hypotheses were formulated and tested in this study. The descriptive research design of survey type was employed in this study. The total population was twenty-six thousand, seven hundred and forty-four (26,744) SMEs owners / managers. The sample size consisted of seven hundred and nine (709) SMEs owners/managers through the use of multi-stage sampling procedure. Four questionnaires were used to generate data for the study namely: Credit Risk Management Questionnaire (CRMQ), Operational Risk Management Questionnaire (ORMQ), Market Risk Management Questionnaire (MRMQ) and SMEs Sustainability Questionnaire (SSQ). The instruments were validated by three experts in Business Education department, Tai Solarin University of Education. Further subjected to a test-retest reliability check with reliability coefficients of (r = .81), (r = .70), (r = .73) (r = .82) for (CRMQ), (ORMQ, (MRMQ) and (SSQ) respectively. Simple Linear Regression Analysis was used to test the hypotheses at .05 level of significance. The results showed that the CRM had significant influence on SMEs sustainability (β = 0.81; t = 37.08, p < .05); ORM significantly predicted SMEs sustainability (β = 0.81; t = 36.95, p < .05); MRM significantly predicted SMEs sustainability (β = 0.82; t = 37.11 p < .05). Compositely, CRM, ORM and MRM made a contribution of 73.0 % (Adj. R2 = .73) to SMEs sustainability, which was found to be significant (F (3,706) = 616,773, p < .05). It was concluded that CRM, ORM and MRM jointly and relatively contributed to SMEs sustainability in Southwest Nigeria. Consequently, it is recommended that SMEs owners/managers should ensure that strategies and programmes are put in place to establish high level of financial risk management.References
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