Financial literacy and financial resilience in nepalese stock market

Abstract

Financial literacy plays a vital role in enhancing financial resilience, especially in developing economies like Nepal, where limited financial education restricts informed decision-making. This study investigates the impact of financial literacy on financial resilience among investors in the Nepalese share market, focusing on key dimensions such as personal savings, risk tolerance, investment options, and financial knowledge. Using a descriptive and causal-comparative research design, data were collected from 400 investors through structured questionnaires employing convenience sampling. Statistical analyses including correlation and regression were conducted to examine the relationships between financial literacy components and financial resilience. Findings reveal a significant positive influence of financial literacy on financial resilience. Investors with higher financial knowledge tend to make better investment decisions, including risk management and portfolio diversification. Risk tolerance further enhances confidence and effectiveness in managing financial shocks, while personal savings provide a foundation for seizing investment opportunities. Access to a variety of investment options enables investors to align strategies with individual risk preferences and financial goals. These factors collectively contribute to improved financial resilience and better financial outcomes. The study emphasizes the importance of comprehensive financial education programs targeted at retail investors in Nepal to bridge existing knowledge gaps. Policymakers and financial institutions must prioritize such initiatives to foster a financially literate population capable of making informed investment decisions. Enhancing financial literacy will not only improve individual financial well-being but also support sustainable economic growth in Nepal. Keywords: Financial literacy, financial resilience, investment behavior, Nepalese share market, risk tolerance