Financial Literacy and Women’s Stock Market Investment Decision in the Pakistan

Abstract

Financial literacy has become one of the strongest predictors of stock market participation in the 21st century. The capacity to assess risk, understand financial instruments, and make informed investment decisions has grown essential as global economies become more complex and investment choices more sophisticated. A structural gap between financial literacy and actual investment action continues to pose both a research challenge and a policy concern. Against this backdrop, this study examines the impact of financial literacy comprising financial knowledge, skills, and behavior on stock market investment decisions of women investors in Pakistan, with risk aversion as a moderating variable. Primary data were collected from women investors and analyzed using PLS-SEM through SmartPLS4, with two-tailed hypothesis testing. The findings reveal that financial knowledge, skills, and behavior each exert a significantly positive influence on women's stock market investment decisions, while risk aversion also functions as a significant moderator. Notably, the positive effect of knowledge on investment decisions stands out as particularly compelling. The study recommends that educational institutions, financial organizations, and policymakers develop targeted financial literacy programs and investment awareness initiatives to strengthen women's financial confidence, enhance their analytical capabilities, and encourage their meaningful participation in Pakistan's capital market.