A STUDY ON FINANCIAL LITERACY, INVESTORS’ SENTIMENT, AND FINANCING DECISIONS WITH THE MODERATING ROLE OF INVESTORS’ EXPERIENCE: EVIDENCE FROM PAKISTAN

Abstract

This study is unique to explore the impact of investor sentiments and financial literacy on the investment decision of investors with the moderating role of experience. In this relationship, the age and education of the investors are taken as control variables for getting efficient results. Therefore, empirical research is conducted to understand the behavioral pattern of individuals which can stabilize their investment decisions in an emerging market context such as Pakistan. In this study, we incorporate the theoretical perspective of cogitative psychology with investment decisions. For this purpose, three hypotheses are drawn to analyze investor sentiments, financial literacy, investor experience, and investment decision-making by collecting investing data from 100 investors in Pakistan. SPSS 23.0 is used to compile analysis results by applying different techniques such as Factor Analysis, Simple & Multiple Regression, and moderating techniques. The outcomes of the study explain that H1 is accepted, which explores that there is a positive relationship between financial investment and investment decision. Similarly, H2 is also accepted and reports that there is a direct association between investor sentiments and investment decisions. In addition, H3 significantly presents that there is partial moderation in the connection between investor sentiment and investment decision while embraces full moderation in the relationship between financial literacy and investment decision.