IMPACT OF FINANCIAL LITERACY ON INVESTMENT DECISION AND PERSONAL SAVING IN KATHMADU VALLEY

Abstract

This research report explored the impact of financial literacy on investment decisions and personal savings among residents of the Kathmandu Valley. The study objectives aimed to evaluate the effects of financial literacy, financial confidence, financial skill, financial attitude, financial behaviour, and risk tolerance on investment decisions and personal savings. A quantitative research method was employed, involving 300 participants who responded to Likert scale-based questionnaires distributed through online platforms and direct mail. The data analysis included correlation and regression analyses to examine the relationships between variables. Findings indicate that financial attitude, risk tolerance, financial behaviour, financial skill, and financial confidence had significant positive impacts on investment decisions, whereas financial knowledge did not show a significant effect. Financial skill, risk tolerance, and financial attitude demonstrated significant positive relationships for personal savings, while financial knowledge, financial confidence, and financial behaviour did not exhibit statistically significant effects. The study emphasizes the importance of psychological and behavioural factors in influencing financial decisions. The implications of the study suggest that promoting financial literacy and addressing psychological and behavioural factors are crucial for influencing investment decisions and personal savings. Policymakers, educators, and financial institutions should collaborate to implement strategies that empower individuals and enhance financial decision-making. However, the study has limitations, including the restriction of data to the Kathmandu Valley and the potential respondent bias due to the online data collection method. Therefore, generalization of the study results should be approached with caution. Nonetheless, the findings contribute to the understanding of financial behaviour in the region and lay the groundwork for future research in financial literacy and decision-making. Keywords: financial attitude, financial literacy, investment decisions, personal savings, risk tolerance.