The Moderation of Financial Literacy on the Relationship Between Individual Factors and Risky Investment Intention

Abstract

In this paper, the authors aim to manifest the effects of individual factors such as risk averseness in general, locus of control on risky investment intention. At the same time, this study intends to examine whether financial literacy moderates the relationship between risk averseness in general, locus of control and risky investment intention. The data set comprised of 112 participants through survey method. We fulfilled hierarchical regression in order to examine the hypothesized relationships. Accordingly, results showed that risk averseness in general had a significant and negative impact on risky investment behavior. Yet, this study provided no evidence of locus of control as a factor in predicting risky investment intention. Last but not least, it was found that financial literacy moderated these relationships. In other words, financial literacy changed the relationship between risk averseness in general, locus of control and risky investment intention.

How Investors Attitudes Shape Stock Market Participation in the Presence of Financial Self-Efficacy

“…Further, findings have shown that women participate less in the stock market as compared to men as supported by Van . Following past literature, financial knowledge has been found to have a significant influence on stock market participation decisions of investors (Van Rooij et al, 2011) and positively moderate the relationship between money attitudes and stock market participation (β = 0.219) as supported by Aren and Aydemir (2015); Hadi (2017), and Shusha (2017). This shows that more financially literate investors have greater stock market participation as supported by Parrotta and Johnson (1998) and Perry and Morris (2005).…”

“…Bayer et al (2009) has concluded that financial education leads to increased participation in the stock market. Literature has affirmed the moderating role of financial knowledge in financial behaviors including stock market participation (Morrin et al, 2012;Aren and Aydemir, 2015;Hayat and Anwar, 2016;Aydemir and Aren, 2017;Hadi, 2017;Shusha, 2017).…”

“…Further, financial knowledge has moderated the relationship between emotional intelligence and investment decisions (Hadi, 2017). Aren and Aydemir (2015) have concluded that financial literacy has a moderating effect on the relationship between an individual's factors and risky investment intentions. Moreover, literature has also confirmed that financial literacy moderates the relationship between demographic characteristics and financial risk tolerance (Shusha, 2017).…”

Objective, Subjective Financial Literacy Influence on Cognitive Style and Financial Risk Perception

“…Many studies have detected that financial literacy affects risk perception (Aren & Aydemir, 2015;Aren & Zengin, 2016 etc.). However, financial literacy has been examined for the first time in relation to personality risk perception.…”

Factors Explaining the Market Discipline of Sharia Mutual Funds from a Behavioural Finance Perspective: A Theoretical Approach

“…Financial risk tolerance is a variable included in the proposed model because it is assumed to be a fundamental issue underlying a number of financial decisions (Grable & Lytton, 1999). According to Jacobs-Lawson and Hersheym 2005, financial risk tolerance shows a significant effect on saving behaviour for retirement, while Aren and Aydemir (2015) state that risk aversion has a negative influence on risky investment behaviour. The concept of risk tolerance has the opposite meaning to risk aversion.…”