Does Financial Mindfulness Make a Difference? A Nexus of Financial Literacy and Behavioural Biases in Women Entrepreneurs

This article aims to determine the intervening strength of financial mindfulness between financial literacy and behavioural biases in women entrepreneurs. The literature has an enduring discussion regarding the profoundly unique financial behaviour of women. Financial literacy and behavioural biases constitute a recurrent research topic, yet how this nexus exists in the premise of women’s entrepreneurship is not well known. Building on this gap, we examined the impact of financial literacy on women entrepreneurs’ behavioural biases by focusing on financial mindfulness as a potential moderator.

A random sample of 346 women entrepreneurs operating in Pakistan was analysed using structural equation modelling through AMOS 21. The results revealed a significant direct impact of financial literacy on reducing anchoring and herding bias; however, financial literacy was found to be unrelated to mental accounting bias. The moderation analysis further revealed interesting indirect impacts, such that financial literacy strongly reduced mental accounting and herding bias for financially mindful women.

Nonetheless, financial mindfulness does not negatively catalyse the relationship between financial literacy and anchoring bias. By encompassing the concepts of financial literacy, mindfulness and behavioural biases, we offer a unique theoretical strand with practical implications for women entrepreneurs.

We suggest new avenues for the longstanding dilemma related to the factors instigating suboptimal financial decision-making in women entrepreneurs in developing markets.