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Financial literacy and investment behavior of individuals in Pakistan: Evidence from an Environment prone to religious sentiment

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  • Shah, Sobia Shafaq
  • Qureshi, Fiza
  • Memon, Farzana Akmal
  • Uddin, Md Hamid

Abstract

We explore the relationship dynamics between individual’s financial literacy and objective-oriented investment behaviour (OOIB) using the survey data from 686 investors in Pakistan. Drawing impetus from the social cognitive theory, we find that financial literacy significantly influences OOIB, which is subject to the individual’s belief in his/her capacity to manage their own investment portfolio (financial self-efficacy). However, we do not find the hypothesized moderating effect of financial risk attitude on the nexus between financial self-efficacy and OOIB. Our research indicates that factors such as gender, age, education, occupation, income level, and investment experience have a considerable impact on individual's confidence and risk-taking propensity in achieving financial goals. These findings provide valuable insights for policymakers and government bodies aiming to address financial concerns and develop prudent investment policies in an environment influenced by religious sentiments.

Suggested Citation

  • Shah, Sobia Shafaq & Qureshi, Fiza & Memon, Farzana Akmal & Uddin, Md Hamid, 2024. "Financial literacy and investment behavior of individuals in Pakistan: Evidence from an Environment prone to religious sentiment," Journal of Behavioral and Experimental Finance, Elsevier, vol. 44(C).
    • Handle: RePEc:eee:beexfi:v:44:y:2024:i:c:s2214635024000893
    DOI: 10.1016/j.jbef.2024.100974
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    Keywords

    Personal Finance; Financial Well-being; Investment goals; Risk management;
    All these keywords.

    JEL classification:

    • G40 - Financial Economics - - Behavioral Finance - - - General
    • G41 - Financial Economics - - Behavioral Finance - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making in Financial Markets
    • G51 - Financial Economics - - Household Finance - - - Household Savings, Borrowing, Debt, and Wealth
    • G53 - Financial Economics - - Household Finance - - - Financial Literacy

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