CONTRIBUTION OF FINANCIAL LITERACY TO BUSINESS PERFORMANCE: FINDINGS FROM THE CROATIAN HOTEL INDUSTRY

Financial literacy has become a topic of exceptional importance, both on the scholars and policymakers' agenda worldwide, as an epilogue of the recent global financial crisis. Namely, the aspect of financial literacy is assumed to be among the crucial drivers of financial welfare. Surprisingly, measuring financial literacy and estimating its determinants occupy academic researchers' attention more often than calculating its outcomes. Hence, beneficial effects of the higher levels of financial literacy seem to be accepted somewhat uncritically, and at the same time almost unconditionally promoted via unavoidable policy recommendations related to financial education and/or curriculum modifications. Furthermore, both causes and the consequences of financial literacy are examined mainly in the field of personal, rather than corporate finance. Therefore, this paper aims to focus on the aforementioned insufficiently explored areas of the financial literacy concept by investigating implications of a certain level of business financial literacy. The questionnaire research was conducted on a sample of the professional managers in order to quantify assumed positive influence of their financial literacy level on business performance. Hotel industry is at the centre of our study due to its large-scale significance for the Croatian economy, especially for the Split-Dalmatia County in which tourism, hospitality and hotel industry have rocketed in the last few years, and from which managers from 32 hotels filled out a survey. Results confirm beneficial effects of hotel managers' financial literacy level to business performance (measured by an average annual occupancy rate) as well as an important role that financial literacy plays for the managers' attitudes toward risk, satisfaction with bank services and financial behaviour in general. Despite that, research results reveal that even among the professional managers there is a space for improvement of both, financial literacy level and financial behaviour. This is why contribution of financial literacy to an overall financial wellbeing should not be taken as granted, especially on the level of personal finance.(2)