Role of Financial Literacy on Investment Decisions: A Study of Investors Living in Kathmandu Valley
Date
2024
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Publisher
Shanker Dev Campus
Abstract
The study aimed to examine the role of financial literacy on the investment decisions of investors living in the Kathmandu Valley with the specific objectives of assessing the financial literacy of these investors, evaluating their investment decisions related to financial and real assets, and find out the relationship between financial literacy and investment choices.
The study followed descriptive as well as correlational research design was utilizing a quantitative method. In the study, financial literacy was examined through financial knowledge, attitude, and behavior. The study targeted individuals investing in various financial products and real estate within Kathmandu valley, with a sample of 400 respondents selected through convenience sampling. In the study, primary data was collected via surveys, and both descriptive and inferential statistics were used for data analysis. In the study, there were an equal gender distribution, with 50.75% of respondents aged 20 to 30. Educationally, 38.75% held a bachelor's degree, and 30.5% had a master’s degree, predominantly in management. Income varied, with 31.75% earning Rs. 40-60 thousand monthly.
The results reveal that a substantial gap in financial knowledge, particularly regarding government securities and the distinction between debt and equity. The study also found that financial knowledge improved with higher education and income, and also shows that females showed a slightly better understanding than males. Most respondents exhibited positive attitudes toward financial management, although social reluctance to discuss financial matters persisted. There was strong interest in IPOs and long-term investments, with investment behavior varying significantly by gender, education, and income. Overall, the study emphasized the need for enhanced financial education to address these disparities and support informed investment decisions.