The Nexus Of Financial Literacy And Investment Decision In The Light Of Risk Tolerance Mediation

In this research examines the relationship of financial literacy with investment decision along with the mediating role of risk tolerance for the retail investors in Pakistan. The study has employed the decision theory and behavioral finance theory. The primary data required for this study were collected through a structured questionnaire from 325 retail investors from different cities of Punjab, Pakistan by collecting data using a non-probability sampling technique, such as convenience sampling technique. The data has been analyzed through SMART PLS-SEM and SPSS software. The main effect model results indicate that financial literacy has a positive and significant impact on investment decisions. The finding for the mediation effect model shows that the mediating variable of risk tolerance has significantly and positively mediated the relation of financial literacy with investment diction. This study suggests that the government and other decision makers take appropriate steps to increase the level of financial literacy of retail investors because it will result in better saving habits for thepeople and the funds generated from the public can be used for a variety of economic activities and the country's economic growth.