Imperial Journal of Interdisciplinary Research (IJIR) Vol-3, Issue-2, 2017 ISSN: 2454-1362, http://www.onlinejournal.in Imperial Journal of Interdisciplinary Research (IJIR) Page 73 Influence of Financial Literacy on the Growth of Family Businesses in Kenya. Nagib A. Omar (Ph.D. Candidate), Prof. Gregory S. Namusonge (Ph.D.) & Prof. Maurice M. Sakwa (Ph.D.) JKUAT, Kenya. Abstract : A key influence of financial management in any business entity is financial literacy of the family business owners or managers. The purpose of this study was to determine the influence of financial literacy on the growth of family businesses in Kenya, with specific interest in the County Government of Mombasa. The parameters of financial literacy used were financial economic knowledge, financial analysis capability and access to financial information. Mixed research approach was used to carry out this study. The target population comprised of the owners and managers of family businesses across different business sectors in the region. There were 48,187 registered businesses as at 31 st December, 2015. A sample size of 397 family businesses was drawn using Slovin’s formula from which a response of 309 was obtained. Purposive sampling was then employed considering the nature of family businesses being carried out. Sample business units were selected deliberately by the researcher from the sample size. Both primary and secondary data were collected for this study. Data analysis and interpretation was based on descriptive and inferential statistics. Regression analysis, Pearson correlation, factor analysis and analysis of variance (ANOVA) were employed. The study results indicate that financial literacy had a significant and positive influence on the growth of family businesses. The study concludes that financial literacy positively influences growth of family businesses in Kenya and recommends that managers should be able to enhance their financial management practices through acquisition of financial information to make informed financial decisions relating to their businesses. Key words: Financial Management, Financial Literacy, Financial-economic knowledge, financial analysis capability, access to financial information, Growth, Family Businesses 1. Introduction Family businesses have dominated the economic landscape around the world (Liu, Yang & Zhang, 2010 and Wee & Ibrahim, 2012), contribute an average of 75% of the GDP (Prior, 2012 and Buang, Ganefri & Sidek, 2013) and are widely seen as the backbone of the economy (Schwass, 2013) . Family businesses, particularly the small-to- medium sized, are the grassroots of the global economy (Wallace, 2010), and are clearly the majority of all the businesses in the world (Buang et al., 2013). By their very nature, most SMEs are family businesses (Maalu, MacCormick, K’Obobyo & Machuki, 2013). Such family businesses continue to dominate most of the world’s economies. Whether large or small, family businesses play an important role in emerging and developed economies (Wee & Ibrahim, 2012). Financial literacy is the ability to use knowledge and skills to manage financial resources effectively for a lifetime of financial well-being. It entails the knowledge of properly making decisions pertaining to certain finance areas like real estate, insurance, investing saving tax planning and retirement. It also involves intimate knowledge of concepts like interest rates financial planning, time value for money, borrowings and savings profit and loss assets and liabilities etc. In the world all over, financial literacy has been given a lot of attention and is believed to be a key ingredient to personal finance success and overall growth of their businesses; it is relevant to anyone who makes decision about money. Several countries in the world are promoting financial education as a tool of fighting poverty; some of the countries involved are Egypt, Uganda, Ghana, South Africa, Tanzania, and also Kenya. In Kenya, key efforts have been made by the government through Financial Sector Deepening (FSD), which educates people to enhance financial freedom (Njoroge & Ondigo, 2013). According to Janor, Yakob, Hashim, and Wel (2016), financial decision making has been widely acknowledged as one of the important factors that influences financial capability and financial well- being. Thus, identifying factors that are significantly associated with financial decisions is relevant and is one of the crucial issues for individual and national development. With the dynamism in the nature of current financial