Behaviour-Driven Financial Literacy Mapping and its Impact on Household Risk-Taking Capacity Based on Real Economic Indicators

Abstract

This study investigates the behavioural foundations of financial literacy and examines how these foundations shape household risk-taking capacity when confronted with real economic indicators. While financial literacy has traditionally been evaluated through cognitive knowledge and instrumental skills, emerging evidence suggests that behavioural traits—such as self-control, heuristics, impulsivity, loss aversion, and perceived financial self-efficacy—play a central role in how households interpret economic signals and make portfolio decisions. The present research develops an integrated behavioural mapping framework to capture the multidimensional interaction between literacy components, behavioural tendencies, and macroeconomic conditions. Using validated household survey datasets, market-level indicators including inflation trends, interest rate fluctuations, and household saving–consumption patterns, as well as recorded investment behaviours, the study constructs a comprehensive dataset suitable for advanced modelling. A mixed-method analytical design is employed, combining behavioural clustering with econometric estimation to quantify how behavioural literacy profiles translate into differential risk-taking capacities. The model also evaluates how external economic indicators moderate the relationship between literacy and risk behaviour, particularly in environments characterised by volatility and income insecurity. Among the key contributions of the study is the introduction of a behaviour-driven literacy map that allows for the identification of distinct household profiles—from risk-conservative to risk-adaptive—based not only on cognitive knowledge but on behavioural indicators that shape financial responses. The findings reveal that behavioural literacy dimensions exert a stronger predictive effect on risk-taking capacity than traditional literacy measures. Moreover, households with higher behavioural adaptability demonstrate more resilient investment behaviour when exposed to adverse economic conditions. The research contributes to the financial literacy literature by shifting the analytical focus from knowledge-based models to integrated behavioural mechanisms and by providing a framework applicable to policymakers, financial educators, and market analysts seeking to improve household financial resilience. The mapping approach also offers practical insights for designing targeted interventions that account for both behavioural diversity and economic constraints.