The role of financial literacy and risk tolerance: an analysis of genderdifferences in the textile sector of Pakistan

Abstract

This research explores the effect of financial literacy and risk tolerance on decisions making for investment by men andwomen in the textile sector of Pakistan. It examines the role of risk tolerance as mediator in relation between financialliteracy and individual’s investment decision making. It also examines the moderating effect of gender differencebetween financial literacy and risk tolerance. Collection of research data was done from the 300 respondents in thetextile sector of Faisalabad through the self-administered questionnaire by using convenient sampling. This researchwork represented the facts that financial literacy has a positive and significant relationship with risk tolerance, andinvestment decisions are significantly influenced by it. Risk tolerance has a positive and insignificant impact oninvestment decisions.In contrast, the mediation role of risk tolerance is insignificant between the financial literacy level of individuals anddecisions made by them for investment. The purpose of a moderator as gender differences is significant. This studyempowers managers to provide basics financial services to employees. Management might be guided that what shouldbe highlighted and what has to be improved to enhance the financial literacy level of textile workers. Employers can playa vital role in building awareness and to educate their employees on fiscal wellness, investment planning, andretirement. Financial literacy can also help employees to achieve commercial success, and it is fruitful in providingbenefit plans at work and in their financial affairs