Mitigating role of Financial Literacy in association with Risk-taking Behavior of Investors Decision Making

Abstract

Purpose: The core purpose of the research study is to examine the items affecting the risk-taking behavior on the investment decision making. Emotional intelligence (EA), Risk Aversion (RA) and Locus of control (LOC) are used in the study as independent variables(IV) and Risky Investment Intention (RII) as dependent variable (DV).

Methodology: For this purpose, primary data were collected via Questionnaire founded on five point’s Likert, random sampling technique were used; 550 Questionnaire were distributed among which 498 were selected for the data analysis. Financial Literacy (FL) is used as a moderating variable in study whereas emotional intelligence, Risk Aversion and Locus of control used as IVs & risky behavior as DV. PLS-SEM was run by SMART-PLS 3.3 to test the significance of relationship among the variables.

Results / Findings: There is significant impact of an emotional intelligence, Risk Aversion on Risky Investment Intention but there is no impact of Locus of control on risky investment intention. Moreover, there is no impact of moderating variable Financial Literacy on the relationship of an emotional intelligence, Locus of control with risky investment intention. Whereas, Fiscal Literacy has significant positive impact among RA and RII of Investors of PSX.

Novelty / Originality of the study: This study Influencing Factors on the Risk-taking Behavior of Investors Decision Making not only enriches academic discourse but also furnishes invaluable insights for practitioners navigating the complexities of financial decision-making.