The effect of the IV (independent variable) on the DV (dependent variable) diminishes after the addition of the mediator to the model.

The figure depicts the standard regression weight between CVA (coronavirus awareness) and FH (financial health) diminishes from 0.13 to 0.07 after the addition of the mediator FL (financial literacy). Thus, showing full mediation by the mediating variable. The IV (coronavirus awareness) exerted its total influence on the DV (financial health) through the mediating variable (financial literacy). If we take the mediator away, the relationship between the DV and the IV disappears. It shows the importance of financial literacy programs for good financial health. All three constructs are represented by their own sets of observed variables with error variables e1–e17. Out of which e4–e5 and e11–e12 are correlated with each other. The assignment of measured variables to each latent construct is graphically equivalent to drawing arrows from each construct to the measured variables that represent that construct. The degree to which each measured variable is related to its construct is represented by that variable’s loading as values on the arrow shown in the figure.