Examining the Interaction Between Financial Literacy and Financial Risk Tolerance with Emphasis on the Moderating Effect of Financial Intelligence
Keywords:
Financial Literacy, Financial Risk Tolerance, Financial Intelligence, Structural Equation Modeling, Tehran Stock ExchangeAbstract
This study aimed to examine the relationship between financial literacy and financial risk tolerance among employees of the Tehran Stock Exchange, with emphasis on the moderating effect of financial intelligence. This applied study used a descriptive-survey and causal-correlational design. The statistical population consisted of employees of the Tehran Stock Exchange, from whom 295 respondents participated in the final analysis. Data were collected using standardized questionnaires measuring financial literacy, financial risk tolerance, and financial intelligence. The validity of the instruments was assessed through expert review, convergent validity, and discriminant validity, while reliability was evaluated using Cronbach’s alpha and composite reliability. Data analysis was conducted using SPSS 22 and Visual PLS. Descriptive procedures were used for preliminary data screening, and partial least squares structural equation modeling was applied to test the measurement model, structural model, and moderating effect. The Kolmogorov–Smirnov test showed that the study variables did not follow a normal distribution, supporting the use of PLS-SEM. The structural model showed acceptable explanatory and predictive power, with financial risk tolerance having an R² value of 0.645 and a Q² value of 0.181. The overall goodness-of-fit index was 0.625, indicating strong model fit. Hypothesis testing showed that financial literacy had a positive and statistically significant relationship with financial risk tolerance (β = 0.527, t = 7.82, p = 0.000). However, the moderating effect of financial intelligence on the relationship between financial literacy and financial risk tolerance was not statistically significant (β = -0.053, t = 0.89, p = 0.370). The findings indicate that financial literacy is an important predictor of financial risk tolerance, but financial intelligence does not significantly change the strength or direction of this relationship. Therefore, improving financial literacy may be a direct and practical pathway for enhancing informed financial risk tolerance.
References
[1] M. Bunyamin and N. A. Wahab, "Impact of Financial Literacy on Finance and Economy: A Literature Review," Labuan Bulletin of International Business and Finance (Lbibf), vol. 20, no. 2, pp. 49-65, 2022, doi: 10.51200/lbibf.v20i2.3677.
[2] C. G. Rodrigues and B. V. Gopalakrishna, "Financial Literacy–a Regulator of Intended Investment Behaviour: Analysing the Hypothetical Portfolio Composition," Managerial Finance, vol. 50, no. 5, pp. 837-853, 2023, doi: 10.1108/mf-03-2023-0177.
[3] N. Potts, "Domain‐Specific Predictors of Financial Risk Taking: Revisiting the Role of Knowledge, Experience, and Financial Risk Tolerance," Financial Planning Review, vol. 8, no. 4, 2025, doi: 10.1002/cfp2.70020.
[4] J. Antwi and C. B. Naanwaab, "Generational Differences, Risk Tolerance, and Ownership of Financial Securities: Evidence From the United States," International Journal of Financial Studies, vol. 10, no. 2, p. 35, 2022, doi: 10.3390/ijfs10020035.
[5] W. R. Murhadi, F. R. Kencanasar, and B. S. Sutedjo, "The Influence of Financial Literacy and Financial Interest on the Financial Risk Tolerance of Investor in Indonesia," Journal of Law and Sustainable Development, vol. 11, no. 2, p. e310, 2023, doi: 10.55908/sdgs.v11i2.310.
[6] M. A. Pangaribuan and E. Bertuah, "Factors Affecting Investment Decisions in Private Employees in Jabodetabek," Literatus, vol. 5, no. 2, pp. 331-341, 2023, doi: 10.37010/lit.v5i2.1417.
[7] C. Frank et al., "Overconfidence and Financial Risk Tolerance in Older Age," 2024, doi: 10.31234/osf.io/vcsu3.
[8] K. Rukhsar, "Effect of Financial Literacy on Financial Risk Tolerance With Conscientious Personality Mediation. Does the Neuroticism Personality Moderate?," Journal of Finance & Economic Research, 2024, doi: 10.20547/jfer2409202.
[9] J. H. Young, "The Impact of Financial Literacy, Generation, and Socioeconomic Factors on Financial Risk Tolerance: An African American Study," The Review of Black Political Economy, vol. 51, no. 2, pp. 228-249, 2023, doi: 10.1177/00346446231152805.
[10] A. J. Luther and S. Sumani, "The Influence of Demographic Factors and Financial Literature on Students' Investment Perceptions," International Journal of Applied Business and International Management, vol. 8, no. 2, pp. 26-39, 2023, doi: 10.32535/ijabim.v8i2.2137.
[11] K. Alfando, N. Anastasia, and O. Y. Yuliana, "Empowering Indonesian Millennials: The Role of Financial Literacy, Goal Clarity, and Risk Tolerance in Retirement Savings," Financial Planning Review, vol. 8, no. 3, 2025, doi: 10.1002/cfp2.70013.
[12] J. Yuan, K. M. Chong, I. S. H. Hii, and H. L. Li, "A Comparative Study of Female Retirement Awareness and Readiness in Malaysia and China," Environment-Behaviour Proceedings Journal, vol. 8, no. 24, pp. 151-162, 2023, doi: 10.21834/ebpj.v8i24.4639.
[13] M. Naveed and S. Ali, "Does Risk Tolerance Mediates the Relationship Between Financial Literacy and Financial Wellbeing During COVID-19: Empirical Evidence From an Emerging Economy," Sage Open, vol. 14, no. 4, 2024, doi: 10.1177/21582440241297065.
[14] S. Neruja and S. Harishanthan, "Unlocking the Interplay Among Financial Capability, Risk-Taking Ability and Financial Well-Being: Insights From Women in Sri Lanka," Asian Journal of Economics Business and Accounting, vol. 24, no. 11, pp. 457-470, 2024, doi: 10.9734/ajeba/2024/v24i111569.
[15] S. M. A. Manaf, M. T. Amron, Z. Abdullah, Z. Mohamad, and S. L. M. Hashim, "Fostering Future Investors: Analysing Determinants of Stock Market Participation Among Malaysian Students Using PLS-SEM," Information Management and Business Review, vol. 16, no. 3(I)S, pp. 452-463, 2024, doi: 10.22610/imbr.v16i3(i)s.4073.
[16] V. I. Dewi, A. Herwany, M. Widyarini, and U. Widyastuti, "Factors Affecting the Intention to Invest in Cripto Assets Among Indonesian Youth," Jurnal Aset (Akuntansi Riset), vol. 15, no. 1, pp. 155-166, 2023, doi: 10.17509/jaset.v15i1.56897.
[17] A. Nindya, A. N. P. Pa, I. G. B. Wiksuana, W. Suartana, L. Gede, and S. Artini, "The Influence of Social and Personal Factors in Individual Investment Decision Making," Qas, vol. 23, no. 191, 2022, doi: 10.47750/qas/23.191.10.
[18] M. U. Malik, "Investigating Risky Investment Decisions: The Co-Existence of Financial Know, Risk Appetite, and Planned Behaviour," Jour. Pol. Soc., vol. 1, no. 4, pp. 285-294, 2023, doi: 10.63067/kr0ysx96.
[19] K. Goyal, S. Kumar, and A. O. I. Hoffmann, "The Direct and Indirect Effects Of financial Socialization and Psychological Characteristics on Young Professionals' Personal Financial Management Behavior," International Journal of Bank Marketing, vol. 41, no. 7, pp. 1550-1584, 2023, doi: 10.1108/ijbm-09-2022-0419.
[20] J. Kumar, V. Rani, G. Rani, and T. Sarker, "Determinants of the Financial Wellbeing of Individuals in An emerging Economy: An empirical Study," International Journal of Bank Marketing, vol. 41, no. 4, pp. 860-881, 2023, doi: 10.1108/ijbm-10-2022-0475.
[21] S. Aren and H. N. Hamamcı, "Evaluation of Investment Preference With Phantasy, Emotional Intelligence, Confidence, Trust, Financial Literacy And risk Preference," Kybernetes, vol. 52, no. 12, pp. 6203-6231, 2022, doi: 10.1108/k-01-2022-0014.
[22] S. Aren and H. N. Hamamcı, "The Moderating Effect of Subjective Financial Literacy on the Relationship Between Coping Strategies and Financial Risk Tolerance," International Journal of Social Sciences Perspectives, vol. 12, no. 1, pp. 28-40, 2022, doi: 10.33094/ijssp.v12i1.733.
[23] F. Muthia, N. D. M. Saputri, S. Andaiyani, and A. Novriansa, "Can Risk Tolerance Moderate Financial Literacy and Internet Banking Behavior During Covid-19?," Jurnal Keuangan Dan Perbankan, vol. 26, no. 2, pp. 416-424, 2022, doi: 10.26905/jkdp.v26i2.6814.
[24] S. Ananda, R. P. Kumar, and T. Dalwai, "Impact of Financial Literacy on Savings Behavior: The Moderation Role of Risk Aversion and Financial Confidence," Journal of Financial Services Marketing, vol. 29, no. 3, pp. 843-854, 2024, doi: 10.1057/s41264-023-00265-1.
[25] N. Mauliddah, M. A. Danurwindo, B. Ulum, O. I. Wibowo, and G. N. Pravitasari, "Mediasi Literasi Keuangan Dalam Memprediksi Risk Tolerance Pada Anggota Organisasi Muhammadiyah Di Jawa Timur," Sentralisasi, vol. 12, no. 2, pp. 46-59, 2023, doi: 10.33506/sl.v12i2.2400.
[26] J. G. Apochi, N. M. Ahmed, J. Okpanachi, and S. E. Agbi, "Herding Bias and Financial Risk Tolerance on Individual Investment Performance in Nigeria: Moderated by Financial Literacy," International Journal of Business and Management Review, vol. 12, no. 3, pp. 1-17, 2024, doi: 10.37745/ijbmr.2013/vol12n3117.
[27] N. E. A. Hadi, N. A. J. Shafidan, S. R. Razali, Q. M. Abdulateef, and M. S. A. Hamid, "The Face and Content Validity of an Instrument for Measuring Financial Risk Tolerance," Journal of Computational Innovation and Analytics (Jcia), vol. 2, no. 1, pp. 57-88, 2023, doi: 10.32890/jcia2023.2.1.4.
[28] J. B. Habyarimana and V. Kakkar, "Financial Literacy, the risk‐as‐feelings Hypothesis, and Passive Income Generation," Financial Planning Review, vol. 5, no. 4, 2022, doi: 10.1002/cfp2.1154.
[29] D. Patrisia, A. Abror, S. Dastgir, and R. Rahayu, "Generation Z’s Financial Behaviour: The Role of Islamic Financial Literacy," Isra International Journal of Islamic Finance, vol. 15, no. 2, pp. 20-37, 2023, doi: 10.55188/ijif.v15i2.540.
Downloads
Published
Submitted
Revised
Accepted
Issue
Section
License
Copyright (c) 2025 Moein Shahmohammadi (Author); Soheila Torgheh; Mohammad Khatiri (Author)
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.
