Effect of Financial Literacy and Financial Self-Efficacy on Individuals' Investment Intention: The Mediating Role of Risk-Taking Behavior

Abstract

The research specifically contributes to the Theory of Planned Behavior (TPB) by examining the financial literacy and financial self‐efficacy of those partaking in financial market activities as major contributing factors toward their intentional behaviors to invest. Furthermore, it also takes into account their risk‐taking behavior as a mediator. Hence, a cross‐sectional research approach was adopted. Additionally, Multiple Regression and the Hayes Process method were used. Primary data was collected through a survey questionnaire from 400 active investors who were statistically selected through purposive sampling. The results indicate that the financial literacy of the respondents, as well as their financial self‐efficacy, significantly determines their intentions to invest (H1, H2). The findings further indicate the partial mediation of their financial literacy and investment intention (H3) relationship and their financial self‐efficacy and investment intention (H4) through their risk‐taking propensity. This research recommends that financial events, trainings, and seminars should be organized for awareness.