The Mediating Effect of Financial Literacy on Blockchain Technology Application and Financial Risk: Insight from Ghanaian Professionals towards Policy Recommendations

Abstract

This study explores the mediating effect of financial literacy on the relationship between blockchain technology application and financial risk among financial institution professionals in Ghana. Utilizing a correlational research design, data were collected from a sample of 336 professionals through a self-constructed Likert-scale questionnaire. The analysis was conducted using path analysis and mediation techniques. The findings reveal that financial literacy significantly mediates the relationship between blockchain technology application and financial risk. Specifically, the indirect effect of blockchain technology application on financial risk through financial literacy was significant, accounting for 26.0% of the total effect. The direct effect of blockchain technology application on financial risk also remained significant, highlighting the independent contribution of blockchain technology application in reducing financial risk. These results underscore the importance of financial literacy in enhancing the effectiveness of blockchain technology application in mitigating financial risks. The study emphasizes the need for comprehensive financial literacy programs to maximize the benefits of technological advancements in the financial sector. Empirical evidence from related literature supports the findings, indicating that higher financial literacy enables better utilization of blockchain technology application, thereby reducing financial risk. The research provides valuable insights for policymakers and educational institutions aiming to improve financial literacy and leverage blockchain technology application for financial risk management.