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Vol. 6 No. 3 (2026): September

Risk Tolerance as a Mediation Mechanism between Financial Literacy and Investment Decisions Among Students

https://doi.org/10.35912/ahrmr.v6.n3.p249-263.2026

Abstract

Purpose: to analyze the influence of financial literacy on investment decisions among students, with a focus on risk tolerance
Research Methodology: This study employed a quantitative approach and was analyzed using Smart Partial Least Squares (Smart PLS). The survey in this study was conducted by distributing an open questionnaire through G-form.

Results: The results show that risk tolerance significantly mediates the influence of financial literacy on investors’ decisions. This means that financial literacy not only directly influences investment decisions but also primarily increases students' risk tolerance.

Conclusions: Financial literacy has been shown to have a strong and substantive influence on risk tolerance, suggesting that increased financial understanding contributes to a more open attitude towards investment uncertainty. Risk tolerance, in turn, exerts a stronger influence on investment decisions than financial literacy, confirming its position as a key determinant of students' investment behavior.

Limitations: The study was limited by a relatively narrow age range among respondents, which may restrict the generalizability of the findings. Future research should examine broader age groups to validate and extend these results.

Contributions: Theoretically, these results enrich the behavioral finance literature by confirming that investment decisions are determined not only by knowledge but also by psychological factors that shape an individual's readiness to take on risk. In practice, these findings imply that financial education programs in colleges should not only focus on improving cognitive financial literacy but also include training using risk simulations, paper trading, and market case studies to build more realistic and proportionate risk tolerance

Keywords

Financial Literacy Investment Decision Risk Tolerance

How to Cite

Fauji, D. A. S., Puspasari, I. D., & Kusumaningtyas, D. (2026). Risk Tolerance as a Mediation Mechanism between Financial Literacy and Investment Decisions Among Students. Annals of Human Resource Management Research, 6(3), 249–263. https://doi.org/10.35912/ahrmr.v6.n3.p249-263.2026

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Authors

1 Diah Ayu Septi Fauji
Universitas Nusantara PGRI Kediri, Kediri, Indonesia
2 Ismayantika Dyah Puspasari
Universitas Nusantara PGRI Kediri, Kediri, Indonesia
3 Dian Kusumaningtyas
Universitas Nusantara PGRI Kediri, Kediri, Indonesia

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Issue

Vol. 6 No. 3 (2026): September
Section: Articles
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