Impact of Financial Literacy on Investment Choices in Urban vs Rural Areas

The present study examines the impact of financial literacy on investment choices with a comparative analysis between urban and rural populations. In the context of increasing financial complexity and expanding investment opportunities, financial literacy has become a crucial factor influencing individuals’ financial decision-making and overall economic well-being. The primary objective of the study is to assess the level of financial literacy among individuals and analyze its effect on their investment behavior. The study also aims to compare financial literacy levels and investment patterns between urban and rural respondents. The research is grounded in the theoretical framework of Behavioral Finance, which emphasizes the role of knowledge and psychological factors in financial decision-making. The study is based on primary data collected through a structured questionnaire from a sample of 300 respondents, equally divided between urban and rural areas. The data is analyzed using statistical tools such as percentage analysis, mean, standard deviation, t-test, correlation, regression, and Structural Equation Modeling (SEM) under Data Analytics. The findings of the study reveal that financial literacy has a significant positive impact on investment choices. Individuals with higher financial literacy tend to invest in diversified financial instruments such as stocks and mutual funds, whereas individuals with lower financial literacy prefer traditional and safer investment options such as bank deposits and gold. The study also finds a significant difference between urban and rural populations, with urban respondents exhibiting higher levels of financial literacy and more advanced investment behavior. Furthermore, the study identifies that the area (urban vs rural) acts as a moderating variable, influencing the strength of the relationship between financial literacy and investment choices. The results indicate that the impact of financial literacy on investment decisions is stronger among urban respondents compared to rural respondents Key words- financial literacy, investment choices, financial decision making