Financial Risk Tolerance as a Mediator Between Financial Literacy and Stock Market Participation: Evidence From Single Men and Women

Abstract

Anchored upon the theory of planned behavior, the study examines a mediator, financial risk tolerance, in the relationship between financial literacy and stock market participation among single men and women. Using data from the 2019 Survey of Consumer Finances, the study uncovers an indirect effect of financial literacy on stock market participation through the mediating role of financial risk tolerance. This effect is observed in both genders, with a more pronounced mediation effect for men than for women. The study suggests that this gender disparity in the mediating mechanism is driven by the stronger correlation between financial risk tolerance and stock market participation among men, as the study finds that men exhibit a higher propensity to invest in the stock market when their financial risk tolerance increases compared with women. Consequently, the study asserts that addressing the gender gap in stock market participation may hinge on empowering women to transform their financial risk tolerance into concrete investment actions.