Why is it important? Financial literacy in students in entrepreneurship: A systematic literature review

Introduction

Entrepreneurship is widely recognized as a driver of economic growth, job creation, and social innovation, and universities increasingly position entrepreneurship education and support programs as pathways for students to pursue entrepreneurial careers (Mustafa et al., 2023). In the era of globalization and digitalization, the barriers to entry are lower for young people who can leverage data, e-commerce, and social media to innovate and transform conventional industries (Kumar, 2024). Yet, innovation and creativity alone do not guarantee business success; the ability to manage finances effectively is equally decisive.

Financial literacy covering personal financial management, budgeting and cash-flow planning, saving and borrowing, risk assessment and investment, basic accounting, and capital management enables entrepreneurs to make informed decisions, identify opportunities, and ensure long-term sustainability (Dwyanti, 2024). Evidence across contexts indicates that many university students still exhibit low levels of financial literacy, exposing them to costly mistakes, fraud, and fragile cash-flow positions (Abdul Karim et al., 2023; Li, 2024). Insufficient mastery of fundamental principles undermines the quality of decisions, weakens working-capital discipline, and elevates risk of business failure (Rehman & Mia, 2024).

The developing-country context amplifies these challenges. In Indonesia, for instance, the entrepreneurship ratio was reported at 3.47%, below the 4% threshold commonly cited for developed economies, despite a large absolute number of entrepreneurs and strong student aspirations to found businesses (Katadata, 2023; Kemenkopukm, 2023). This structural gap suggests that building robust financial capabilities among student entrepreneurs is not merely complementary but foundational to venture viability and growth.

Theoretically, financial literacy can be framed as human capital that enhances productivity and entrepreneurial performance (Becker, 1993). Within entrepreneurship education frameworks, integrating finance competencies through active, practice-based learning is expected to strengthen entrepreneurial intentions and action (Fayolle & Liñán, 2014). From the lens of the Theory of Planned Behavior, stronger financial literacy increases perceived behavioral control, thereby improving the likelihood of sound entrepreneurial decision-making (Ajzen, 1991). Although prior studies and reviews have examined financial literacy and entrepreneurship, there remains a lack of systematic synthesis focused specifically on student entrepreneurship in developing countries, and on how financial competencies are embedded within higher-education entrepreneurship curricula and interventions. Addressing this gap, the present systematic literature review (PRISMA 2020) analyzes the role of financial literacy in student entrepreneurship with an emphasis on developing-country contexts.

Methods

PRISMA procedure

A. Identification

Relevant literature was identified through the Scopus database due to its broad coverage of peer-reviewed journals. The search used Publish or Perish software (Harzing, 2024). The primary keyword string was:

(“financial literacy” AND entrepreneurship AND student*) OR (“financial literacy” AND “youth entrepreneurship”)

The search covered 2014–2024 and yielded 155 records. Visualization of results using Publish or Perish is presented in Figure 2.

B. Screening

Records were screened by title and abstract to remove studies that were not student-focused or unrelated to entrepreneurship. Two independent reviewers conducted the screening and resolved disagreements through discussion.

C. Eligibility

Full-text assessment evaluated methodological clarity, topical fit, and validity of findings.

D. Inclusion

Studies meeting all criteria were retained for synthesis. Inclusion and exclusion criteria were defined a priori to ensure relevance and rigor (Tod, 2019).

Inclusion and Exclusion Criteria

Inclusion: (i) 2014–2024; (ii) peer-reviewed empirical studies (quantitative, qualitative, or mixed methods); (iii) focus on students in an entrepreneurship context; (iv) English language. Exclusion: non-empirical articles, studies outside entrepreneurship education, or non-English sources. After screening 155 records, 36 studies were included in the final synthesis. The selection process of studies is illustrated in Figure 3. The identified records were categorized by document type as shown in Table 1.

Figure 1. Entrepreneurship Ratio in Indonesia.

Note: This figure/table has been reproduced with permission from Katadata (2023).

Figure 2. Scopus keyword search using Publish or Perish.

Figure 3. PRISMA flow diagram.

Table 1. Sorting documents.

Document type	Sum
Article	115
Book	1
Book Chapters	16
Conference Papers	20
Editorials	1
Reviews	3

Results and Discussion

Findings are organized according to the three research objectives to improve clarity and interpretability. The national entrepreneurship ratio that contextualizes this issue is shown in Figure 1.

Conclusion

This review confirms financial literacy as core human capital for student entrepreneurship in developing countries. Critical skills include budgeting and cash-flow management, saving and borrowing, risk assessment and investment, and basic accounting. Practice-oriented curricular approaches and industry partnerships are most effective in strengthening literacy and improving entrepreneurial outcomes. Integrating financial literacy within entrepreneurship education can enhance decision quality, resilience, and venture sustainability among student founders.

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