Impact of Financial Literacy on Investment Decisions: The Mediating Effect of Big-Five Personality Traits Model (original) (raw)
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This study investigates the role of risk behaviour in mediating the association between personality traits and investment intention and moderating role of financial literacy between the association of risk behaviour and investment intention within a sample of 284 students with finance background. Regression analyses was executed in a series to test the impact of independent variables on dependent variables. Along this, separate models for the mediator and for the moderator were appraised to get more vibrant results. Results suggest that individuals who are active, sympathy toward others, determined, well-organized are more willing toward Investment. Further results revealed that risk behaviour partially mediates the relationship of Personality traits with STII. However, in case of Long run Risk behaviour partially mediates the relationship of "Extraversion", "Agreeableness" , "Openness to Experience", and "Conscientious" with LTII and fully mediate the relationship of "Neuroticism" and LTII. Beside this, Study revealed that financial literacy has significant impact on STII and LTII. However , financial literacy does not moderate the association of risk behaviour and investment intention. The study could have implications for financial managers, Financial institutions, and governments to comprehend the role of financial literacy and risk behaviour while advising individuals to make investment.
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Purpose: The purpose of our research is to find out the relationship between an individual financial literacy and how this financial literacy influences his perceived investment performance. It proposes or put forward to find out the impact of social influence (as moderating variable) on the role of investor's personality in determining perceived investment performance while making investment decision process. Design /Methodology/Approach: In this research we used questionnaire-based survey to collect the information about the factors which influences their investment decision. We have collected the responses of 50 investors through sampling approach. The collected data were then analyzed to evaluate the relationship between personality traits, perceived investment performance, financial literacy and social influence. Findings: The research study suggests that the variable, social influence positively moderates the relationship between investor's personality traits and perceived investment performance. And personality trait mediates the relationship between financial literacy and perceived investment performance. Research limitations/Implications: Our research study has certain limitations. Since the study has been conducted in two cities; like Rawalpindi and Islamabad, the results of our study may lack generalizability. Therefore, further studies could be encouraged to test the proposed hypotheses. Practical implications: Insights from this study suggests that investors should look into the financial literacy before making any investment decision. Financially literate people make better decisions which benefit them in contrast with illiterates.
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This study investigates the role of risk behaviour in mediating the association between personality traits and investment intention and moderating role of financial literacy between the association of risk behaviour and investment intention within a sample of 284 students with finance background. Regression analyses was executed in a series to test the impact of independent variables on dependent variables. Along this, separate models for the mediator and for the moderator were appraised to get more vibrant results. Results suggest that individuals who are active, sympathy toward others, determined, well-organized are more willing toward Investment. Further results revealed that risk behaviour partially mediates the relationship of Personality traits with STII. However, in case of Long run Risk behaviour partially mediates the relationship of "Extraversion", "Agreeableness" , "Openness to Experience", and "Conscientious" with LTII and fully mediate the relationship of "Neuroticism" and LTII. Beside this, Study revealed that financial literacy has significant impact on STII and LTII. However , financial literacy does not moderate the association of risk behaviour and investment intention. The study could have implications for financial managers, Financial institutions, and governments to comprehend the role of financial literacy and risk behaviour while advising individuals to make investment.
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This research work makes underpinning of the Financial Risk Seeking through the window of finance education. This study explores that how Conscious personality perform a mediatory role while neurotic personality act as a moderator in the relationship of finance education and financial risk seeking. For accomplishment of the study purpose data set is gathered from university students of Faisalabad, Pakistan. The online survey technique is employed for generating the data set which integrated 200 respondents. The PLS (SEM) modelling was used for data analysis. The path analysis shows that the finance education proved as a statistically noteworthy positive association with financial risk seeking. The conscientious personality trait has a statistically noteworthy direct mediating association between finance education and financial risk bearing. The neurotic personality has inverse and statistically significant moderation association between finance education and financial risk bearing. This study will be helpful for government, policy makers, wealth managers and scholars for chalking out strategies as well as for individual and institutional investors for rational decision making for best portfolio development.
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Since the financial crisis in 2008 the investigation of financial literacy–especially its components (personality, attitudes, behaviour etc.) - is in the limelight. Modern economics have recognized that in order to effectively forecast financial and economic processes it is primordial to understand the attitudes of the members of society toward finances, as well as the characteristics of various social group sharing the same views and behaviours. In 2015 two relevant pieces of research were conducted in this topic in Hungary. One focuses on the financial personality types, while the other investigates Hungarians’ financial culture in general based on the research methodology of the OECD. Based on these two databases our comparative study highlights the main characteristics of financial personality types. The three clusters based on the OECD research cover the nine personality types from the results of the other Hungarian research. Our findings show that the cluster of “anxious unsat...
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Using theories from personality psychology and the theory of planned behavior, this study investigated those personality variables and psychological mechanisms through which individual investor intends to make investment decisions. The main purpose of this study was to examine the relationship between big five personality traits (Extroversion, Neuroticism, Conscientiousness, Openness to Experience and Agreeableness) and Investment decisions (Short term and long term). This study also examined the moderating effects of need for cognition, individual mood and mediating effects of financial selfefficacy between the study variables. Data was collected from 506 individual investors by using a questionnaire. Investors were selected from Pakistan Stock Exchange. Mediation analysis was performed using Hayes (2013) PROCESS macro in SPSS. Results of the study supported a positive relationship between openness to experience, extraversion and short term investment decision. Similarly a positive...
Personality Traits and Investment Choices of Investor
International Journal of All Research Education \& Scientific Methods 9 (6 {\ldots}, 2021
Behavioural finance, which considers human behaviour in finance, is a relatively recent field, despite the fact that finance has been studied for thousands of years. Behavioural finance models, which are focused entirely on psychology, attempt to comprehend how emotions and personality influence the behaviour of individual traders. The study's main aim is to look at the behavioural factors that influence individual buyers' decisions on the NSE and BSE Stock Exchanges. The data collected from the Students, Professionals through structured questionnaire were examined and data collected were analysed using Cronbach's Alpha Reliability Test, based totally on which, hypotheses are proposed. The theories are then tested using questionnaires provided to individual customers, college students, and practitioners. The result indicates that there are five personality traits affecting the funding selections of person investors at the NSE & BSE Stock Exchange: extraversion, agreeableness, openness to experience, conscientiousness, and neuroticism. This takes a look at also tries to discover the correlation among these personality traits and investment overall performance. Every investor has a unique set of circumstances and interests, and therefore a unique perspective on financial risk and financial objectives. Investors vary in terms of their locus of influence as well as their personality traits. The findings reveal that the aspects of neuroticism, extraversion, and openness to experience have a fine mediated relationship with the investors' investment portfolio. All the personality traits have the significant relationship with the investment choices. Psychographic considerations play a significant role in deciding an individual's investing behaviour. Investment decisions carry inherent risks in themselves. A person's risk assessment is influenced by a variety of influences, one of which is the collection of personality characteristics he or she possesses. Furthermore, each individual is unique and has different financial goals. Individuals can be classified into personality groups depending on their individual psychology, which influences the investor's risk mindset and, as a result, his investment plans.The decision-making process for an individual investor can be seen as a constant process that has a profound effect on their psychology when making investment decisions. To recognise and interpret investment choices, behavioural finance focuses on individual and social recognition testing as well as emotional tolerance tests. Behavioural finance, which considers human behaviour in finance, is a relatively recent field, despite the fact that finance has been studied for thousands of years. Behavioural finance models, which are focused entirely on psychology, attempt to comprehend how emotions and personality influence the behaviour of individual traders. In the current economy, capital market investing is critical.The study's main aim is to look at the behavioural factors that influence individual buyers' decisions on the NSE and BSE Stock Exchanges. The present study aims to study the relationship between personality traits (big five model) and the investment choices of investor. The data collected from the Students, Professionals through structured questionnaire were examined and data collected were analysed using Cronbach's Alpha Reliability Test, based totally on which, hypotheses are proposed. The theories are then tested using questionnaires provided to individual customers, college students. The result of the research study proves that the personality traits have influence towards the choices of the investor. The findings reveal that all five personality traits have the significant relationship with the investment choices.
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As an individual investor, it is incredible to have a successful performance return without financial knowledge. An organization's performance must be measured and analysed based on an adequate financial management system. In today's multifaceted financial scenery Financial Literacy is crucial as it does not only impact financial decisions at the business level but is also important for the country's development. Financial literacy has the importance of the backbone of society. The study adds a new mechanism of financial literacy. The main objective of this study is to determine further insight into the role of financial literacy on an individual's behaviour and attitude towards financial decision making. For analysis, the moderator impact of financial literacy on decision-making data of 100 individual investors has been collected from different banking sectors of Pakistan. The result of this study shows that financial literacy has a significant impact on financial d...