Effects of Investment Knowledge on Investment Decision: Mediating Role of Financial Literacy
Sima Darvishan*
Msc. Finance and Financial Mathematics, Accounting, Finance and Marketing Department Pompea College of Business, University of New Haven, US.
*Corresponding Author Email: sdarv1@unh.newhaven.edu
Abstract
Background and Aim: The importance of investment knowledge and financial literacy on inurement behavior is not well recognized. Moreover, there is a notable lack of research addressing the mediating role of financial literacy in this context. Consequently, this study aims to investigate the effects of investment knowledge on investment decision with considering the mediating role of financial literacy.
Methods: This study employs a quantitative methodology to explore the research topic. A cross-sectional survey design was utilized to gather primary data from individual investors. This approach was deemed suitable as it enables the efficient collection of data from a substantial number of respondents within a relatively brief timeframe. Furthermore, it offers a structured framework for evaluating the constructs under examination. The research implemented a non-probability sampling method, specifically purposive sampling, to select a sample of 259 individual investors. Standard questionnaires were used to collect data. Pearson correlation test and the structural equation modeling were used for data analysis.
Results: The results indicate that investment knowledge has a significant impact on investment decisions, with a T-value of 6.284. Additionally, investment knowledge was found to significantly influence financial literacy, as evidenced by a T-value of 5.176. Furthermore, financial literacy was shown to affect investment decisions, with a T-value of 5.738. Notably, financial literacy serves as a significant mediator in the relationship between investment knowledge and investment decisions, with a p-value of less than 0.001. The model fit results suggest that the research model demonstrates a good fit.
Conclusion: The results indicated that investors with a solid foundation in financial knowledge tend to make sound investment choices, and this relationship is further reinforced by their level of financial literacy. Consequently, financial literacy plays a crucial role in empowering individuals to make informed investment decisions, thereby facilitating effective financial management.
Keywords: Investment, knowledge, decision, literacy, investor
download DOI: http://dx.doi.org/10.61186/