Influence of Financial Literacy on Investment Behavior: The Mediating Role of Financial Satisfaction
Sima Darvishan*
Msc. Finance and Financial Mathematics, Accounting, Finance and Marketing Department Pompea College of Business, University of New Haven, US.
*Corresponding Author Email: sdarv1@unh.newhaven.edu
Abstract
Background and Aim: The importance of financial literacy and behavior in attaining investment satisfaction is well recognized. Nevertheless, there is a notable lack of research addressing the mediating role of investment satisfaction in this context. Consequently, this study aims to investigate the impact of financial literacy on investment behavior while taking into account the mediating effect of financial satisfaction.
Methods: This research adopts a quantitative approach to investigate the subject matter. A cross-sectional survey design was employed to collect primary data from individual investors. This methodology was considered appropriate as it allows for the efficient collection of data from a large number of respondents within a relatively short period. Additionally, it provides a systematic means to assess the constructs under investigation. The research utilized a non-probability sampling technique, specifically purposive sampling, to select a sample of 259 individual investors. Standard questionnaires were used to collect data. Pearson correlation test and the structural equation modeling were used for data analysis.
Results: Results reveled that financial literacy significantly affected investment behavior (T=5.556). Moreover, financial literacy significantly affected financial satisfaction (T=4.583). Furthermore, emotions affected investment behavior (T=4.479). Finally, financial satisfaction has significantly mediated the relationship between financial literacy and investment behavior (P<0.001). Results of model fit indicated that the research model has good fit.
Conclusion: The implications of these findings are crucial for various stakeholders, including individual and corporate investors, as well as institutional investors. It is suggested that financial literacy and behavior are essential in enhancing financial satisfaction and promoting prudent investment decisions.
Keywords: Investment, behavior, literacy, satisfaction, investor