Understanding the Influence of Subjective Financial Literacy on the Investment Decisions of Individual Investors in India

The present work examines the association between subjective financial literacy, self-reported by Indian individual investors and the factors that affect their investment decisions concerning fundamental and technical analysis. A structured questionnaire was employed using a purposive sampling procedure to collect the requisite data from individual investors on their demographic profiles, perceived financial literacy and determinants of investment decisions. For developing the measurement model and testing the research hypotheses, Partial Least Squares Structural Equation Modeling (PLS-SEM) was taken into consideration. The result showed that conceptual knowledge, accounting information, technical knowledge and market information are positively associated with the investors’ investment decisions. Furthermore, it highlighted the role of subjective financial literacy in significantly impacting investors’ investment decisions. This study is the first of its kind because previous studies completely ignored the need to assess the perceived financial literacy of investors and its association with the factors determining their investment decisions. Based on the study’s findings, fruitful suggestions are provided to various stakeholders.