Do risk tolerance and financial literacy impact the investment intention of securities investors in Pakistan?

An evaluation through the theory of planned behavior

  • Muhammad Khan Rahies PhD Scholar Bahria University Karachi, Pakistan
  • Mubashir Ali Khan Assistant Professor Bahria University Karachi Pakistan
  • Mahrukh Askari Department of Management Studies Bahria University Karachi, Pakistan
  • Qamber Ali University of Turbat Baluchistan, Pakistan
  • Rabail Shoukat Bahria University Karachi
Keywords: Financial literacy, intention, risk tolerance, TPB


This paper aims to investigate the applicability of the Theory of Planned Behavior (TPB) in examining individuals’ behavioral intention to invest in the capital market. This study extends the TPB model by considering the role of Risk tolerance as a factor in influencing the individuals’ behavioral investment intentions. The study investigates the mediating impact of financial literacy on the relationship between TPB and investment intentions. This paper is based on a cross-sectional approach. The research model is tested through structural equation modeling (SEM). Data were collected from 114 individuals from Karachi, Lahore, and Islamabad, Pakistan through a survey questionnaire and analyzed through Smart PLS software. The results of this study reveal the role of risk tolerance and financial literacy over the investment intention of financial securities. This study indicates that attitude, subjective norms, perceived behavioral control and risk tolerance significantly impact investment intentions. The findings signify that financial literacy can increase the intention of investing in financial securities. However, our study shows that having financial literacy does not reduce the risk concerns of investing in securities. This study expands on the well-established TPB model by incorporating risk tolerance and moderator of financial literacy behavioral intentions. It also extends the applicability of the TPB in the area of investment decision-making toward all financial securities. This study is limited to the financial sectors of Karachi and can be extended to cross-country evaluation of the effect of financial literacy on risk tolerance.


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How to Cite
Rahies, M., Khan, M., Askari, M., Ali, Q., & Shoukat, R. (2022). Do risk tolerance and financial literacy impact the investment intention of securities investors in Pakistan?. Empirical Economic Review, 5(1), 104-137. Retrieved from