Behavioral Determinants of Digital Financial Awareness and Literacy: The Role of Financial Risk Tolerance in Students in South India

Abstract

This study investigates the mediating role of financial risk tolerance (FRT) in the relationship between digital financial literacy (DFL) and financial well-being (FWB) among students in South India. In a quantitative study, N = 387 respondents completed a structured questionnaire, and the data were analyzed using Structural Equation Modeling (SEM). The research measures the effect of digital financial knowledge (DFK), digital financial skills (DFS), and digital financial experience (DFE) on financial well-being, with financial risk tolerance (FRT) as a moderator. Findings indicate that digital financial literacy has significant effects on financial well-being, and that DFK is the strongest predictor. Despite the model’s strong overall statistical power, digital financial risk (DFR) showed no significant direct effect on FWB. Further, FRT has a significant but comparatively smaller moderating effect on the DFL–FWB relationship; these findings indicate that risk tolerance can influence, but does not by itself predict, well-being. This study contributes to the literature by incorporating financial risk tolerance as a moderating variable in the model of digital financial literacy and well-being. The findings can help policymakers, educators, and financial institutions design financial literacy training that accounts for variation in risk tolerance across individuals.