Is Awareness That Powerful? Women’s Financial Literacy Support to Prospects Behaviour in Prudent Decision-making

Abstract

Financial literacy is of utmost relevance in the field of entrepreneurship, especially in developing countries. However, what builds financial literacy and how it shapes investment decision-making of women entrepreneurs is an exiguously researched area. Building on this gap, this study postulates that women entrepreneurs’ prospect behavioural factors (loss aversion, regret aversion, mental accounting, and self-control) impact their investment decision process through the intervening role of financial literacy. Based on a stratified sample of 579 women entrepreneurs operating in Punjab, Pakistan, structural equation modelling was used to analyse the hypothesized relationship among variables. Findings showed that loss aversion, regret aversion, mental accounting, and self-control significantly influenced women’s financial literacy and investment decision process, whereas no impact of regret aversion was traced on investment decision-making. Thus, our results offered robust support that financial literacy stimulated by women entrepreneurs’ prospect behaviour invigorates their investment decision power.