RISK TOLERANCE AND RISKY INVESTMENT INTENTION MEDIATED BY FINANCIAL LITERACY

Muhammad Ayaz Khattak , Zain Ullah , Muhammad Tariq

Abstract

The purpose of the study is to identify the effect of individual factors such as risk tolerance i.e. risk taker & risk averse on risk related investments. At the same time the study also intends to examine the effect of financial literacy i.e. whether this variable mediate the relationship between risk tolerances in general and risky investment intention. The methodology composed of positivist philosophical stance, deductive approach and quantitative method with primary data through adopted questionnaires. Descriptive statistics, correlation and Baron and Kenny model has been used for analysis. Accordingly, results conclude that taking risk in general has impact on risky investment intention while averseness of risk has no impact on risky investment intention. Similarly, the study also provides an evidence that financial literacy plays a mediating role, because financial literacy changed the behavior/relationship between risk tolerance (risk taker & risk averse) in general and risky investment intention. There for this consideration should boost the financial education and literacy for better investment decision of investors

Keywords: Risk tolerance, financial literacy and risky investment intention.