Financial Literacy and Investment Decisions among Pito Brewers in the Upper West Region of Ghana

Abstract

The study examined the financial literacy levels of pito brewers in the Wa
Municipality and how these levels influence respondents’ investment decisions,
drawing on the prospect theory to explain observed behavioral patterns such as
loss aversion and framing effects. A descriptive research design was adopted
using primary data through the administration of 120 structured questionnaires
to selected pito brewers in the Wa Municipality. Descriptive statistics and factor
adequacy tests were employed to analyze financial literacy levels and their
nexuses with investment decision-making. The findings revealed that pito brewers
possessed a moderate level of financial literacy, which positively influenced their
investment decisions. However, most respondents had no formal education and
earned discretionary monthly incomes ranging between GH₵1,000 and
GH₵3,000. Consistent with the prospect theory, the results suggest that pito
brewers exhibit loss-averse behavior, whereby perceived potential losses
discourage investment participation more strongly than equivalent gains
encourage it. Additionally, investment decisions were found to be sensitive to the
framing of financial outcomes, reflecting susceptibility to framing effects.
Although financial literacy improved confidence in decision- making, its
moderate level was insufficient to reduce risk aversion significantly. The study
was limited to pito brewers in the Wa Municipality, which may restrict the
generalizability of the findings to other regions or occupational groups within the
informal sector. The study highlights the need for targeted financial literacy
programs that will not only enhance technical financial knowledge but also
address behavioral biases such as loss aversion and framing effects to improve
investment participation among informal sector workers in Ghana.