The Impact of Financial Literacy and Behavioral Factors on Financial Risk-Taking Propensity

Abstract

The aim of this study is to examine the impact of individuals' financial literacy levels and behavioral finance factors on their financial risk-taking propensity. A quantitative research approach with a survey design was utilized in the study. Data were collected via a questionnaire from 391 employees in the accommodation and food services sector, selected through the convenience sampling method. The obtained data were analyzed using SPSS and SmartPLS software. The findings indicate a negative relationship between financial literacy and behavioral financial factors. In addition, a negative relationship was found between financial literacy and financial risk-taking propensity, whereas a positive relationship was identified between behavioral finance factors and financial risk-taking propensity. Through structural equation modeling, behavioral finance factors were revealed to be the primary determinant in explaining risk-taking propensity, with the cognitive illusions dimension providing the highest contribution among these behavioral factors.