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Assessment of Investment Intention Based on Financial Literacy, Personality Traits, Behavioral Biases, Investor Traits and Financial Self-Efficacy

In: Proceedings of the 12th International Conference on Business, Accounting, Finance and Economics (BAFE 2024)

Author

Listed:
  • Chan Soo Peng

    (Universiti Utara Malaysia, School of Quantitative Sciences)

  • Suzilah Ismail

    (Universiti Utara Malaysia, School of Quantitative Sciences)

Abstract

Investment is investing money for profit and accepting risks due to future uncertainties. Stocks and mutual funds are common investment options for individuals aiming to build wealth. There are several existing instruments measuring investment intention using 2 to 3 factors. However, none connected them simultaneously. Therefore, this study aims to develop a valid and reliable instrument for assessing investment intention by integrating 5 key factors: financial literacy, personality traits, behavioral biases, investor traits, and financial self-efficacy. The instrument consists of 6 constructs, 15 dimensions, and 52 items. The instrument is validated using content and face validity involving two experts and a focus group containing five investors. The instrument reliability testing was implemented using Cronbach Alpha and Exploratory Factor Analysis (EFA) based on pilot (104 respondents) and main study (272 respondents). The findings show that the overall Cronbach Alpha values are 0.88 (pilot) and 0.92 (main), and the EFA identified 6 factors explaining 87.1% of the total variance, indicating instrument reliability. Strong correlations exist between investment intention and financial literacy (0.85), financial self-efficacy (0.89), and personality traits (0.85), respectively, while moderate correlations with behavioral biases (0.61) and investor traits (0.65). These findings demonstrate that the instrument is valid and reliable, providing a comprehensive tool for assessing investment intention. This tool enhances the understanding of the psychological and cognitive factors influencing investment behavior, offering significant potential for researchers and practitioners in behavioral finance.

Suggested Citation

  • Chan Soo Peng & Suzilah Ismail, 2025. "Assessment of Investment Intention Based on Financial Literacy, Personality Traits, Behavioral Biases, Investor Traits and Financial Self-Efficacy," Advances in Economics, Business and Management Research, in: Abdelhak Senadjki & Fanyu Chen & William Keng Soon Choo & Voon Hsien Lee & Chooi Yi Wei (ed.), Proceedings of the 12th International Conference on Business, Accounting, Finance and Economics (BAFE 2024), pages 294-308, Springer.
    • Handle: RePEc:spr:advbcp:978-94-6463-666-6_18
    DOI: 10.2991/978-94-6463-666-6_18
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