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Influence of financial literacy on retail investors' decisions in relation to return, risk and market analysis

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  • Swati Prasad
  • Ravi Kiran
  • Rakesh Kumar Sharma

Abstract

Investors differ in their decisions with respect to risk, returns and market analysis. The present study attempts to examine the influence of financial literacy on retail investors' decisions in relation to return, risk and market analysis. The study uses convenience sampling to collect data from the retail investors through stock brokerage managers. Factor analysis has been employed for understanding factors of financial literacy. Financial literacy is composed of Accounting Information; Market Information; Broad Overview; and Technical Knowledge. The factors of Investment decisions are: Return Analytics; Risk Analytics; and Market. The risk and return analytics have stronger impact on investors decision than market analytics. PLS SEM has been employed for examining relation between financial literacy and Investment decision. The results suggest a significant positive relation between financial literacy and investment decision.

Suggested Citation

  • Swati Prasad & Ravi Kiran & Rakesh Kumar Sharma, 2021. "Influence of financial literacy on retail investors' decisions in relation to return, risk and market analysis," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 26(2), pages 2548-2559, April.
    • Handle: RePEc:wly:ijfiec:v:26:y:2021:i:2:p:2548-2559
    DOI: 10.1002/ijfe.1920
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    2. Shakira MUKHTAR & Anisa JAN, 2023. "Decoding financial literacy's mediating role: analyzing the influence of biopsychosocial indicators on financial satisfaction and risk tolerance among millennial investors," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania - AGER, vol. 0(4(637), W), pages 219-242, Winter.
    3. Isidore, Renu & Arun, C. Joe, 2023. "The Moderating Effect of Financial Literacy on the Relationship Between Decision-Making Tools and Equity Returns in the Indian Secondary Equity Market," Revista Finanzas y Politica Economica, Universidad Católica de Colombia, vol. 15(1), pages 185-211, January.

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