How Financial Risk Tolerance Mediates Between Financial Literacy and Household Wealth of Employees in Ghana

Abstract

This study explores the role of financial risk tolerance as a mediator between financial literacy and household wealth among employees in Ghana. Adopting a cross-sectional quantitative research design, data were collected using a structured questionnaire with a five-point Likert scale from employees in both public and private sectors. The analysis, conducted through partial least squares structural equation modeling, revealed that financial literacy significantly influences household wealth, both directly and indirectly, through financial risk tolerance. The results demonstrated that financial risk tolerance serves as a complementary mediator, enhancing the effect of financial literacy on household wealth. Specifically, employees with higher financial literacy levels exhibited greater risk tolerance, which in turn positively affected their wealth accumulation. The study also finds that demographic factors, particularly age and education level, significantly control the relationship between financial literacy and household wealth. However, gender was not found to have a significant control effect on this path. This research contributes to the literature by emphasizing the importance of financial risk tolerance in the wealth-building process and offers new insights for policymakers to design strategies that foster both financial literacy and risk tolerance, ultimately promoting financial well-being among employees in Ghana.

Keywords: Financial Risk Tolerance; Financial Literacy; Household Wealth; Financial Well-Being; Financial Education

DOI: 10.7176/RJFA/16-9-03

Publication date: November 30^th 2025