Do Cognitive Traits and Education Level Influence Spiritual Oriented Investment Decisions—An Empirical Investigation

Abstract

AbstractThe phenomenal growth of faith-based products is a clear indication of the popularity of the faith-based products and spiritual orientation of the investment decision of the investors. In order to make sound financial decisions, financial literacy plays a critical role in financial understanding of the products and making appropriate improvement in the financial decision-making. But, does investment decisions (both spiritual oriented and technical) are influenced by the education level and behavioural biases? This particular study aims at studying the impact of education level and behavioural bias, namely investment sentiment, overconfidence, overreaction and underreaction and herd behaviour on the investment decision. The direct effect of education level (independent variable) and the mediating effect are captured with the help of partial regression model. A Sobel test was used to determine the indirect effect of the behavioural biases on the investment decision. Behavioural biases play a significant role in investment decision-making, and the literature confirms this. As per the extant literature, it was observed that no empirical study has explored the above mentioned dynamics in Indian context. This paper examines the direct effect of education level on investment decision (measured at two levels) as well as the mediating effect of the behavioural biases.