Investigating University Students' Willingness to Invest in Cryptocurrencies in Sri Lanka: Does Financial Risk Tolerance Matter?

Abstract

Cryptocurrencies have sparked debates globally, leading to diverse reactions from countries regarding their regulation. Sri Lanka remains cautious, as evidenced by its absence in the 2021 Chainalysis Adoption Index and its 58th ranking in 2022, indicating growing user numbers despite warnings from the Central Bank of Sri Lanka. This study uses the Theory of Planned Behavior (TPB) to assess Sri Lankan university students’ intentions to invest in cryptocurrencies, exploring financial risk tolerance as a moderating variable. TPB suggests that attitudes, subjective norms, and perceived behavioral control predict intentions, with financial risk tolerance potentially influencing these intentions. The research collected data from students at top state and private universities in Sri Lanka through structured questionnaires, employing descriptive statistics and structural equation modeling (SEM) for analysis. Results showed that attitudes, subjective norms, and perceived behavioral control significantly influence investment intentions in cryptocurrencies. However, financial risk tolerance did not significantly modify these effects, suggesting that the volatile nature of cryptocurrencies attracts those with higher risk tolerances, rendering the moderating effect of financial risk tolerance negligible. This study offers insights for practitioners and policymakers, highlighting factors influencing cryptocurrency investments among university students and emphasizing the need for informed investment strategies suitable for varying risk tolerances. These findings enhance understanding of investment behavior in emerging markets like Sri Lanka.