The impact of understanding financial risk and risk tolerance on individual investment decisions regarding the role of financial literacy
Subject Areas :somayeh momeni 1 , ali zabihi zarrin kolae 2 , Khosrow faghani 3
1 - Full-time faculty
2 -
3 - Associate Professor and member of the Faculty of Accounting, Islamic Azad University, Semnan branch
Keywords: Keywords: risk perception - risk tolerance - financial literacy - investors' decision making.,
Abstract :
Somayeh Momeni Ali Zabihi Khosro Faghani Makerani Abstract Considering that financial markets are constantly changing and becoming more complex, having financial literacy seems a necessity to increase financial knowledge in investors that leads to making informed financial decisions. The aim of the current research is to investigate the impact of risk perception and risk tolerance on the decisions of individual investors with regard to the role of financial literacy in the Tehran Stock Exchange market. This research is an applied research in terms of its purpose and a descriptive survey in terms of its nature and research method. The statistical population included individual investors of Tehran Stock Exchange, 384 of whom were tested according to Cochran's formula for the population with an unlimited number and an error level of 5%. The data collection tools are standard questionnaires, and data analysis and hypothesis testing have been done using the structural equation modeling method and SPSS24 and PLS3 software. The results of the research showed that financial risk tolerance has an effect on investors' decision making. Also, financial risk perception and financial risk tolerance have an impact on investors' decision-making according to the mediating variable of financial literacy. Meanwhile, the findings showed that risk perception has no effect on investors' decision making.