Impact of Financial Literacy and Financial Interest on Risk Tolerance
The level of financial literacy in Pakistan is the subject of this research. Financial literacy or financial knowledge is inherently used to measure the need for financial education and analyses shifts in financial risk-taking propensity. What the study shows is that those with more financial knowledge are the ones who save more. Investors and the general public cannot avoid having enough understanding and information regarding the working of financial institutions and markets, kinds of risks and return, which indeed is beneficial for the development of the economy. The research questions of this study are as follows: What is the role of financial literacy and financial interest in risk tolerance? In the present study, data was collected through structured questionnaires from 210 respondents of Pakistan through convenience sampling technique. In this work correlation and regression analysis were used to analyze the data. The result shows that financial literacy and financial interest has a positive impact on the investment decision. The use of convenience sampling methods as well as the use of a small sample size. The financial literacy is acknowledged as the primary competence of the people operating in the financial markets. It has a great importance in establishing the context that fosters the targeted financial behaviors. It assists people in reaching wise financial decisions that will not have them losing their hard-earned money. It is the issue for both developed and developing nations alike. In Pakistan financial illiteracy is considered as the primary cause of low level of Financial Inclusion.
INDEX TERMS: Financial interest, Investment behavior, risk tolerance and Risk management
