Financial Education, Risk Tolerance and Financial Behaviour of Rural Traders in Upper East Region of Ghana; Does Financial Literacy Matter?

Financial literacy and behaviour of rural traders

Abstract

Inadequate savings and poor saving habits among rural traders suggest that many may struggle to navigate the increasingly complicated financial markets. The study explores the connection between financial education, financial behaviour, financial literacy and risk tolerance among rural traders. We used structured questionnaires to collect data from 489 participants in the Upper East Region of Ghana and performed multiple regressions and mediation analysis. Our findings reveal a strong positive link between financial education and financial behaviour. Furthermore, financial literacy is found to mediate the financial education and financial behaviour nexus. We also identified a significant link between risk tolerance and financial behaviour. Stakeholder groups, such as the Association of Ghana Industries and the National Board for Small Scale Industries, should organise financial education programmes for rural traders to improve their financial literacy and decision-making.