FINANCIAL LITERACY OF ENTREPRENEURS IN BOSNIA AND HERZEGOVINA: AN ANALYSIS OF KNOWLEDGE AND SKILLS IN MANAGING FINANCES

Abstract

Market economies have grown more complex, bringing with them an array of financial instruments and products. This means entrepreneurs need to understand financial concepts well enough to make sound decisions. Yet many entrepreneurs in Bosnia and Herzegovina (BiH) struggle financially. Most do not have a background in finance and therefore lack the knowledge and skills required to manage their finances effectively. Poor financial literacy leads to bad decisions, decisions that threaten liquidity and can sink entire ventures. This paper examines financial literacy among BiH entrepreneurs across multiple dimensions: Do they know basic financial terms? Can they plan financially? How well do they manage cash flow? Do they understand the financial instruments available to them?

The authors conducted a survey among entrepreneurs across different sectors and company sizes, and the collected data were subjected to quantitative analysis employing descriptive and inferential statistical methods. The findings are concerning: many entrepreneurs simply do not have the knowledge or skills they need to manage finances effectively. The authors argue for a systemic approach to financial education (both formal and informal) supported by educational institutions and business associations. Better financial literacy would directly improve the competitiveness, stability, and long-term viability of BiH's entrepreneurial sector.