Digital Financial Literacy and Investment Grip: A Study of Japanese Active Investors

Investors’ ability to retain investments during bearish and uncertain market periods is a crucial behavioral trait for long-term wealth accumulation and reduces market instability. Nevertheless, little is understood about how digital financial literacy (DFL) shapes the capacity of increasingly digitalized financial environments. This study investigates the links between DFL and investment grip among Japanese active investors—defined here, following conventional Japanese regulatory and research practice, as individuals who maintain a securities account and have engaged with an online brokerage within the past year—building on several theoretical perspectives from behavioral science. Using survey data from 149,261 individuals with an active account at Rakuten Securities, we estimated ordered probit regression models as the main specification. The findings showed a strong positive association between DFL and investment grip, even after accounting for demographic, socioeconomic, as well as cognitive attributes. These results are supported by robustness tests employing a probit model with a binary outcome. The sample consists exclusively of digitally active retail investors; the findings are therefore most directly applicable to this subpopulation. Overall, the evidence suggests that DFL fosters investors’ capacity to endure market volatility by promoting rational decision-making and reducing panic-driven selloffs. This study offers new empirical findings that will help promote financial resilience in technology-driven markets.