OBJECTIVE AND SUBJECTIVE NUMERACY AS PREDICTORS OF FINANCIAL LITERACY AND RISK TOLERANCE: A SERIAL MEDIATION STUDY AMONG INDIAN INVESTORS

This study is among the first in India to formally disaggregate numeracy and test both Objective Numeracy (ON) and Subjective Numeracy (SN) as precursors to Financial Literacy (FL) and Risk Tolerance (RT) in the retail investor context. Using a structured online questionnaire administered to a convenience sample of 447 Indian adult retail investors, the study employs bootstrapped structural equation modelling to estimate a serial mediation model with five demographic moderators. ON was the strongest predictor of FL in simple regression (β=0.471, p<.001, R^2=.222; SEM structural coefficient: β=0.458). SN was significantly associated with FL at the bivariate level (r=.159, p<.001) but this association attenuated to non-significance in the structural model once ON was controlled (a2: β=0.074, p=.081), consistent with ON’s dominant role as the primary numeracy antecedent of FL. The results are consistent with full mediation: the dominant indirect pathway ON→FL→RT (β=0.3859, 95% CI [0.2348, 0.5629]) and the statistically significant serial chain ON→SN→FL→RT (β=0.0116, CI [0.0005, 0.0321]) together account for the total indirect effect. The composite numeracy index revealed a large FL differential across tertiles (F(2,444)=54.29, p<.001, η^2=0.196). No demographic moderation was found. The findings suggest that numeracy-first approaches to financial literacy policy warrant investigation, particularly for financial inclusion schemes targeting lower-income and first-generation investors.