The Mediating Role of Financial Literacy in the Relationship Between Risk Tolerance and Stock Investment Decisions Among Generation Z in Semarang City

Abstract

This study aims to examine the effect of financial literacy on investment decisions, with risk tolerance serving as a mediating variable among Generation Z in Semarang City. The study employed a quantitative approach using the Structural Equation Modeling–Partial Least Squares (SEM-PLS) method with SmartPLS 4. The sample consisted of 143 respondents selected through purposive sampling, with the criteria of being members of Generation Z aged 17–29 years and residing in Semarang City. The findings indicate that financial literacy has a positive effect on both investment decisions and risk tolerance. Furthermore, risk tolerance positively influences investment decisions. The results also reveal that risk tolerance mediates the relationship between financial literacy and investment decisions. These findings suggest that improving financial literacy can enhance individuals' risk tolerance, thereby supporting more rational investment decision-making among Generation Z.