Does Financial Literacy Improve Farmer Resilience? The Role of Risk Perception and Credit Access Among Horticulturists

This article examines the relationship between financial literacy and financial resilience of horticultural farmers, and more specifically, the mediation of such a relationship through the perception of risk and by accessing credit. Data were collected from 500 horticultural farmers in Himachal Pradesh. To this end, a structured questionnaire has been employed, and structural equation modelling (SEM) has been utilized to analyze the direct and indirect relationships between financial literacy, risk perception, credit accessibility and financial resilience. The results indicate that financial literacy has a direct influence on financial resilience that is quite significant. Access to credit and perception of risk are two significant effects of financial literacy, and they positively influence financial resilience. The mediation analysis supports the hypothesis that the connection between financial literacy and financial resilience is mediated by risk perception and access to credit, which are partially confirmed. The findings show that a combined financial literacy programme, better access to credit and a risk-consciousness programme can be used to strengthen the financial resilience of farmers in climatically vulnerable regions. The study provides a unified SEM-based model that amalgamates the capability, behavioural and institutional channels to explain financial resilience among the horticultural farmers.

JEL Codes: Q14, D14, G41, O16, Q12