Impact of Financial Literacy, Financial Knowledge, Moderating Role of Risk Perception on Investment Decision

Abstract

The purpose of this paper is to assess the financial literacy and financial knowledge of the individual and professional investors who invest in the local market. In additions, it examines the relationship between financial literacy, financial knowledge and the influence of risk perception that effect investment decision. The survey was conducted on different investors of Rawalpindi and Islamabad. Data was collected from 257 personnel using adopted questionnaires consisting of measuring each variable on five point likert scale. For data analysis statistical tools such as correlation and regression were tested using SPSS. Result indicates that there is significant positive relationship between financial literacy, financial knowledge, risk perception and investment decision. However, the demographic factors such as gender and age are negatively associated with to investment decision. The current study is considered the first of its kind conducted in Pakistan. To the best of my knowledge, no such studies have been conducting regarding measuring financial literacy, financial knowledge and risk perception or the relationship between financial literacy, financial knowledge level and risk perception that influence investment decisions.

Keywords: Financial Literacy, Financial Knowledge, Risk Perception, Investment Decisions