THE IMPACT OF FINANCIAL LITERACY ON INVESTMENT DECISIONS: THE MEDIATING ROLE OF PEER INFLUENCE AND THE MODERATING ROLE OF FINANCIAL STATUS

Abstract

This study examines the influence of financial literacy, specifically behavioral financial literacy and digital financial literacy on individual investment decisions, incorporating peer influence as a mediating factor and financial position as a moderator, within the framework of the theory of planned behaviour. A quantitative, cross-sectional survey design was employed, collecting data from 400 respondents across diverse professional backgrounds. The study utilized Partial Least Squares Structural Equation Modeling (PLS-SEM) for analysis. Results demonstrate that both behavioral and digital financial literacy significantly and positively influence investment behavior. Peer influence partially mediates these effects, while financial position moderates the relationship between behavioral financial literacy and investment decisions. The findings indicate that individuals with higher behavioral financial literacy exhibit greater financial discipline, long-term planning, and budgeting habits—factors that positively shape investment behavior. Similarly, individuals with advanced digital financial skills are more inclined to engage with online trading and mobile banking, improving access to financial information and enhancing informed decision-making. Peer influence, aligned with subjective norms in the Theory of Planned Behaviour, emerges as a key mediator, emphasizing the social dimension in financial behavior formation. Moreover, the moderating effect of financial position highlights perceived behavioral control, suggesting that greater financial security enables individuals to act upon their financial knowledge. By disaggregating financial literacy into behavioral and digital dimensions, this study advances a more nuanced conceptualization. The integration of social and economic constructs within the Theory of Planned Behaviour contributes to its theoretical expansion and supports a multi-dimensional understanding of investment behavior. Practically, the study advocates for targeted financial literacy interventions that emphasize behavioral and digital competencies, particularly for digitally underserved populations. Future research should explore longitudinal designs and broader socio-psychological constructs to deepen insights into sustainable investment readiness.

Keywords: Behavioral Financial Literacy, Digital Financial Literacy, Investment Decisions, Peer Influence, Financial Position