Financial literacy, risk tolerance and stock market participation in sekondi-takoradi metropolitan
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Date
2023
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KNUST
Abstract
The main aim of the study is to investigate the effects of financial literacy and risk tolerance on stock market participation of households in the Sekondi Takoradi Metropolitan. The study specifically sought to; Examine the effects of financial literacy on participation on the stock market of households in the Sekondi Takoradi Metropolitan; Examine the effects of tolerance for risk on participation on the stock market of households in the Sekondi Takoradi Metropolitan; and examine the mediation effects of tolerance for risk in the relationship between financial literacy and participation on the stock market of households in the Sekondi Takoradi Metropolitan. The study was a quantitative analysis where data was collected from 399 household heads in the Sekondi Takoradi Metropolitan through convenience sampling. The study employed the use of mediation and multiple regression analysis with the SPSS v 23 as the main data processing tool. The study found that any changes in their level of financial knowledge will lead to a 67.4% increment in their participation in the stock market. Also, the level of financial behavior and financial attitudes of these participants will lead to 29.1% and 62% respective declines in the level of participation on the stock market by these household heads. However, financial awareness levels have no significant negative effects on the level of participation on the stock market by these household heads. Also, the current level of tolerance for risk reduces these household heads’ participation in the stock market by an estimated 25.7%. The outcome of the Sobel test indicated that tolerance for risk has a significant negative mediation effect in the relationship between financial literacy and investment decisions of household heads in the Sekondi Takoradi Metropolitan. The study recommends that, the Ghana Stock Exchange inform the public about the securities traded there, what they do, what their purpose is, and how crucial the exchange is to economic progress. This will go a long way toward raising public awareness and encouraging involvement in the process.
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A Thesis submitted to the Department of Accounting and Finance, Kwame Nkrumah University of Science and Technology in partial fulfilment of the requirement for the degree of master of science (accounting and finance)