The impact of behavioural determinants on investment decisions with evidence from meta analysis and meta structural equation modelling

This study examines how risk aversion, financial literacy and overconfidence are associated with individuals' investment decisions, by collecting the data from 37 empirical studies, published between 2014 and 2025, with a combined sample size of 18,835 respondents. The data were analysed, using meta-analysis and meta-analytic structural equation modelling (Meta-SEM), with additional inputs from Prospect Theory, Human Capital Theory and Behavioural Finance Theory. Meta-analysis results revealed that financial literacy did have strong and significant positive association with investment decisions whereas risk aversion and overconfidence reported small and positive but not statistically significant association with investment decisions. The Meta-SEM confirmed that financial literacy played a dominant structural role in shaping investment decisions while risk aversion and overconfidence exerted statistically significant but smaller positive effects. These findings indicated the need to strengthen financial literacy through targeted policy and educational initiatives. This finding would help individuals to better understand financial concepts, which, in turn, could reduce behavioural biases and enable rational investment decisions. This study presents an integrated analytical framework in the field of behavioural finance, offering practical insights to educators, regulators and financial professionals and helping investors to become more informed and resilient.

Authors

Institutions

Publication Details

Journal
Discover Sustainability
Published
2026-03-12
DOI
https://doi.org/10.1007/s43621-026-02737-5
Primary Topic
Financial Literacy, Pension, Retirement Analysis
Type
article
Field-Weighted Citation Impact
0.00
Controls
|||
ALL TIME
JAN
FEB
MAR
APR
MAY
JUN
JUL
AUG
SEP
OCT
article

The impact of behavioural determinants on investment decisions with evidence from meta analysis and meta structural equation modelling

Chinnadurai Kathiravan, Dhivya Bharathi Dhandapani
Discover Sustainability
Financial Literacy, Pension, Retirement Analysis
article

The impact of behavioural determinants on investment decisions with evidence from meta analysis and meta structural equation modelling

Chinnadurai Kathiravan, Dhivya Bharathi Dhandapani
article en

Abstract

This study examines how risk aversion, financial literacy and overconfidence are associated with individuals' investment decisions, by collecting the data from 37 empirical studies, published between 2014 and 2025, with a combined sample size of 18,835 respondents. The data were analysed, using meta-analysis and meta-analytic structural equation modelling (Meta-SEM), with additional inputs from Prospect Theory, Human Capital Theory and Behavioural Finance Theory. Meta-analysis results revealed that financial literacy did have strong and significant positive association with investment decisions whereas risk aversion and overconfidence reported small and positive but not statistically significant association with investment decisions. The Meta-SEM confirmed that financial literacy played a dominant structural role in shaping investment decisions while risk aversion and overconfidence exerted statistically significant but smaller positive effects. These findings indicated the need to strengthen financial literacy through targeted policy and educational initiatives. This finding would help individuals to better understand financial concepts, which, in turn, could reduce behavioural biases and enable rational investment decisions. This study presents an integrated analytical framework in the field of behavioural finance, offering practical insights to educators, regulators and financial professionals and helping investors to become more informed and resilient.

Discover Sustainability
Vellore Institute of Technology University (IN)
Quality Education
Openalex Percentile: Top 24%
Financial Literacy, Pension, Retirement Analysis
AI Navigator

Ask Laika to Summarize, Analyze, and Connect papers live on the map.

Summarize Papers & Methodologies

Extract key findings, datasets, and comparative methods across publications.

Benchmark Rankings & Visual Analytics

Rank top research institutions, authors, funders, topics, and journals by Field-Weighted Citation Impact (FWCI) and paper volume with instant charts.

Connect Distant Disciplines

Bridge topological clusters on the map to find hidden collaborative intersections.