The role of financial literacy in economic stability among traders in Ibadan North Local Government Area, Oyo State
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Background of the study
Financial literacy is increasingly recognized as a cornerstone of economic stability, particularly among traders who operate in competitive markets. In Ibadan North Local Government Area, Oyo State, traders face numerous challenges ranging from fluctuating market prices to limited access to financial services. Financial literacy equips traders with the knowledge and skills required to manage personal finances, make informed investment decisions, and adapt to economic uncertainties (Adewumi, 2023). Recent studies have indicated that higher levels of financial literacy are associated with improved business practices, better credit management, and overall enhanced economic stability (Olanrewaju, 2024). In Ibadan North, traders rely on informal and formal financial systems to sustain their businesses, making the understanding of budgeting, saving, and investment strategies essential. This study investigates the role of financial literacy in promoting economic stability by analyzing the correlation between traders’ financial knowledge and their business outcomes. Employing both survey data and in-depth interviews, the research explores the extent to which financial literacy influences economic decision-making and stability in a dynamic market environment (Babatunde, 2025). The findings are expected to provide valuable insights for designing educational interventions and policy frameworks aimed at bolstering financial literacy among traders.
Statement of the problem
Many traders in Ibadan North struggle with economic instability due to inadequate financial literacy. The lack of proper financial management skills often results in poor budgeting, limited savings, and suboptimal investment decisions, which compromise business sustainability (Olufemi, 2023). Despite the availability of various financial services, traders’ limited understanding of these resources exacerbates their vulnerability to market fluctuations and economic downturns. This deficiency in financial knowledge impedes traders from making informed decisions, thereby affecting overall economic stability in the community. This study aims to investigate the relationship between financial literacy and economic stability among traders and identify targeted interventions to improve financial management practices (Akinyemi, 2024).
Objectives of the study:
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To assess the level of financial literacy among traders in Ibadan North.
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To determine the impact of financial literacy on economic stability.
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To propose strategies for improving financial literacy among traders.
Research questions:
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What is the current level of financial literacy among traders?
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How does financial literacy impact economic stability?
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What measures can enhance financial literacy and business outcomes?
Research Hypotheses:
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Higher financial literacy leads to improved economic stability among traders.
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Inadequate financial knowledge negatively impacts traders’ business performance.
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Educational interventions can significantly enhance financial literacy levels.
Significance of the study
This study is significant as it underscores the critical role of financial literacy in ensuring economic stability among traders in Ibadan North. The insights generated will inform policymakers and financial educators in designing targeted programs to improve financial knowledge, thereby enhancing traders’ ability to manage economic challenges effectively. The research contributes to broader economic development initiatives by promoting sustainable business practices and improved financial management (Olufemi, 2023).
Scope and limitations of the study:
The study is limited to investigating the role of financial literacy in promoting economic stability among traders within Ibadan North Local Government Area, Oyo State, and does not extend its analysis to other sectors or regions.
Definitions of terms:
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Financial literacy: The ability to understand and effectively use various financial skills.
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Economic stability: The consistency and predictability of economic performance.
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Traders: Individuals engaged in buying and selling goods or services.
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