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THE BUFFERING ROLE OF FINANCIAL LITERACY ON THE RELATIONSHIP OF HERDING BEHAVIOUR AND INVESTMENT DECISIONS

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18 Pages : 201-212

http://dx.doi.org/10.31703/ger.2022(VII-II).18      10.31703/ger.2022(VII-II).18      Published : Jun 2022

The Buffering role of Financial Literacy on the Relationship of Herding Behaviour and Investment Decisions

Abstract

    This research paper investigates the buffering role of financial literacy on the direct link between Herding Behavior and Investment Decisions. Using an anonymous survey, we collected data from a total of 514 individual investors based on a convenience sampling procedure in the Pakistan Stock Exchange. The hypothetical model of the study was evaluated using the PLS-SEM approach via SmartPLS 3.2. The data fitted  well for the structural model and the R2 value of 65% supported the moderate level of the model predictive power. Further, we found a positive relationship of herding behavior and investment decisions, while financial literacy modifies this link in a way that persons with greater financial literacy are less likely to be influenced by herding behavior and vice versa. The study's findings provide practical insights for investors, policymakers, and regulators in the PSX, emphasizing the importance of financial literacy in mitigating positive herding behavior-investment decisions relationship.

    Herding Behavior, Financial Literacy and Investment Decisions

    (1) Roman Ullah
    Ph.D. Scholar, Department of Management Sciences, Khushal Khan Khattak University, Karak, KP, Pakistan.
    (2) Faqir Sajjad Ul Hassan
    Assistant Professor, Department of Management Sciences, Khushal Khan Khattak University, Karak, KP, Pakistan.
    (3) Kashif Saleem
    Assistant Professor, Qurtuba University, Dera Ismail Khan, KP, Pakistan.
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Cite this article

APA

    APA : Ullah, R., Hassan, F. S. U., & Saleem, K. (2022). The Buffering role of Financial Literacy on the Relationship of Herding Behaviour and Investment Decisions. Global Economics Review, VII(II), 201-212. https://doi.org/10.31703/ger.2022(VII-II).18

CHICAGO

    CHICAGO : Ullah, Roman, Faqir Sajjad Ul Hassan, and Kashif Saleem. 2022. "The Buffering role of Financial Literacy on the Relationship of Herding Behaviour and Investment Decisions." Global Economics Review, VII (II): 201-212 doi: 10.31703/ger.2022(VII-II).18

HARVARD

    HARVARD : ULLAH, R., HASSAN, F. S. U. & SALEEM, K. 2022. The Buffering role of Financial Literacy on the Relationship of Herding Behaviour and Investment Decisions. Global Economics Review, VII, 201-212.

MHRA

    MHRA : Ullah, Roman, Faqir Sajjad Ul Hassan, and Kashif Saleem. 2022. "The Buffering role of Financial Literacy on the Relationship of Herding Behaviour and Investment Decisions." Global Economics Review, VII: 201-212

MLA

    MLA : Ullah, Roman, Faqir Sajjad Ul Hassan, and Kashif Saleem. "The Buffering role of Financial Literacy on the Relationship of Herding Behaviour and Investment Decisions." Global Economics Review, VII.II (2022): 201-212 Print.

OXFORD

    OXFORD : Ullah, Roman, Hassan, Faqir Sajjad Ul, and Saleem, Kashif (2022), "The Buffering role of Financial Literacy on the Relationship of Herding Behaviour and Investment Decisions", Global Economics Review, VII (II), 201-212

TURABIAN

    TURABIAN : Ullah, Roman, Faqir Sajjad Ul Hassan, and Kashif Saleem. "The Buffering role of Financial Literacy on the Relationship of Herding Behaviour and Investment Decisions." Global Economics Review VII, no. II (2022): 201-212. https://doi.org/10.31703/ger.2022(VII-II).18