Financial Literacy and Women’s Investment Decision Making: Examining the Mediating Role of Financial Confidence and Risk Tolerance

This study set out to examine the effect of financial competence on women's investment  decision-making,        with particular attention to the mediating roles of financial confidence and risk tolerance. The findings demonstrate that financial competence is a significant driver of women's financial confidence, confirming that women who possess a stronger understanding of core financial concepts—such  as  inflation,  interest  rates,  and savings—tend to feel more confident managing their personal finances. This relationship reinforces the view that financial knowledge is not merely informational  but           psychologically empowering, translating into greater self-assurance in financial decision-making. The study further establishes that financial confidence and risk tolerance partially mediate the relationship between financial competence and investment decision-making, confirming that financial competence exerts both a direct and an indirect effect—channeled through enhanced confidence and risk tolerance—on the investment choices women make. This partial mediation suggests that while knowledge alone contributes meaningfully to better investment decisions, its impact is amplified when accompanied by the psychological readiness to act on that knowledge and to accept a reasonable degree of financial risk. Additionally, educational qualification was found to significantly influence    investment decision-making, indicating that formal education continues to play a critical role in shaping women's financial capability and investment behavior.   Collectively, these findings affirm that improving    women's   investment participation requires more than financial education alone; it calls for an integrated approach that simultaneously builds financial knowledge, nurtures confidence, and encourages measured risk-taking. The results carry practical implications for policymakers, financial institutions, and educators, who should design financial literacy interventions that go beyond conceptual instruction to include confidence-building and risk-management components tailored to women investors. By strengthening these interlinked capacities, stakeholders can help narrow the gender gap in investment participation and contribute to greater financial inclusion and economic empowerment for women. Future research extending this inquiry across broader geographic and demographic contexts, using probability-based sampling and longitudinal designs, would further validate and generalize these findings.

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