Do risk tolerance and financial literacy impact the investment intention of securities investors in Pakistan?
An evaluation through the theory of planned behavior
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.
Copyright (c) 2022 Muhammad Khan Rahies, Mubashir Ali Khan, Mahrukh Askari, Qamber Ali
This work is licensed under a Creative Commons Attribution 4.0 International License.
EER follow an open-access publishing policy and the full text of all the articles is available free, immediately upon acceptance. Articles are published and distributed under the terms of the Creative Commons Attribution 4.0 International License. Thus, work submitted to EER implies that it is original, unpublished work of the authors; neither published previously nor accepted/under consideration for publication elsewhere. On acceptance of a manuscript for publication, the corresponding author on the behalf of all co-authors of the manuscript will to sign and submit a completed Copyright and Author Consent Form.
The authors will be responsible for any information written/informed/reported in the submitted manuscript. Although we do not require authors to submit the data collection documents and coded sheets used to do quantitative or qualitative analysis, we may request it at any time during the publication process, including after the article has been published. It is the author's responsibility to obtain signed permission from the copyright holder to use and reproduce text, illustrations, tables, etc., published previously in other journals, electronic or print media.
Conflict of interest statements will be published at the end of the article. If no conflict of interest exists, the following sentence will be used: "The authors declare no conflict of interest." Authors are required to disclose any sponsorship or funding received from any institution relating to their research. The editor(s) will determine what disclosures, if any, should be available to the readers.
Authors are not permitted to post the work on any website/blog/forum/board or at any other place, by any means, from the time such work is submitted to UMT journals until the final decision on the paper has been given to them. In case a paper is accepted for publication, the authors may not post the work in its entirety on any website/blog/forum/board or at any other place, by any means, till the paper is published in UMT Journals.
The authors may, however, post the title, author’s names and their affiliations and abstract, with the following statement on the first page of the paper - "The manuscript has been accepted for publication in UMT Journals". After the publication of the article, it may be posted anywhere with full journal citation included and it is encouraged by EER to do relevant efforts for dissemination of research.
All articles published in UMT journals are open-access articles, published and distributed under the terms of the Creative Commons Attribution 4.0 International License, which permits reproduction, distribution, derives and commercial use, provided the original work is properly cited and authors and the publisher is properly identified.
All authors who send their manuscripts to UMT Journals and whose articles are published will retain full copyright of their articles. Notwithstanding this, the author(s) grant UMT Journal(s), its editors, publishers, owners and other persons associated and other users/readers, a license to use the article as described in the License Agreement section below. In the future, UMT may reproduce printed copies of articles in any form. Without prejudice to the terms of the license given below, we reserve the right to reproduce the author's articles in this way.
The EER follows the licensing agreements by Creative Common Attribution 4.0, which indicates that:
Share -copy and redistribute the material in any medium or format
Adapt- remix, transform, and build upon the material for any purpose, even commercially.
UMT supports a range of author benefit policies with respect to providing authors with an e-print and the opportunity to purchase offprints. E-prints are sent out automatically to the corresponding authors of articles published ahead of print and in print issues. A link is provided allowing the author to download the article directly from the UMT journals website and forward the link onto their co-authors. Please refer to the manuscript submission guidelines for the policy of the journal in which you are interested in submitting or publishing your article.