ROLE OF FINANCIAL LITERACY IN ENHANCING INVESTMENT DECISION-MAKING AMONG WORKING WOMEN: AN EMPIRICAL STUDY

Abstract

Financial literacy has emerged as a decisive determinant of economic agency, yet its influence on the investment behaviour of working women in semi-urban India remains under-examined. This study investigates the relationship between financial literacy and investment decision-making among 540 working women in Ujjain District, Madhya Pradesh, combining a structured questionnaire survey with focused interviews. Financial literacy was measured across six dimensions: financial knowledge, financial awareness, budgeting and savings practices, knowledge of financial products, investment awareness, and digital financial literacy. Investment decision-making was assessed through avenue selection, risk tolerance, portfolio diversification, planning horizon, and the structure of the decision process itself. Findings reveal that only 31.5% of respondents fall in the high financial-literacy band, with literacy declining sharply among lower-income and lower-education groups. A chi-square test established a statistically significant association between literacy level and the breadth of investment instruments held (χ² = 78.42, p < 0.001), while Pearson correlation indicated a strong positive relationship between the composite literacy score and an investment-quality index (r = 0.71, p < 0.01). Multiple regression confirmed that financial literacy is the single strongest predictor of sound investment decisions (β = 0.48), ahead of income and education. Women with higher literacy diversified more widely, tolerated calibrated risk, planned over longer horizons, and engaged more actively with retirement and digital instruments, whereas low-literacy respondents concentrated savings in low-yield, traditional instruments and deferred decisions to family members. On the strength of these results, the paper proposes the Financial Literacy–Investment Decision Framework for Working Women (FLIDF-WW), an integrated model linking financial education, awareness, risk assessment, investment planning, digital competence, decision capability, and financial well-being. The study contributes empirical evidence from a hitherto under-researched Tier-II Indian setting and offers targeted recommendations for educators, employers, financial institutions, and policymakers seeking to translate financial capability into measurable economic security for women.