The Importance of Financial Literacy for Investment Decisions

DOI

10.2991/978-2-38476-581-2_2How to use a DOI?

Keywords

Financial literacy; Investment behavior; Risk awareness; Sustainable Economy; Financial Inclusion

Abstract

Financial literacy is an essential component of investment behavior that empowers individuals to measure risks, diversify portfolios, and make informed choices. In Bangladesh, where formal financial participation is constrained, knowing the impact of literacy on investment decisions is crucial for economic advancement. The primary objective of this study is to assess the level of financial literacy among individuals and examine its impact on investment decision-making. To achieve greater outreach, primary data was collected through a structured online questionnaire. For analysis purposes, 309 responses were considered acceptable for data analysis, representing respondents from various demographic groups. The main variables evaluated comprised financial knowledge, risk awareness, investment duration, social influence, and investment intention, quantified by a five-point Likert scale. Descriptive statistics and multiple regression analysis were conducted using SPSS to examine how these factors influence future investment intention. Findings reveal that most respondents understand basic financial concepts such as risk–return calculation and diversification. The regression results show that financial knowledge, financial skill, and risk perception significantly and positively shape future investment intentions. In comparison, social influence and past investment behavior were statistically insignificant, indicating that investment decisions in Bangladesh are increasingly driven by personal competency rather than external pressure or habitual tendencies. Despite progress in awareness, many respondents still struggle with practical application of financial knowledge, highlighting the need for experiential financial education. Improving national financial literacy initiatives, incorporating practical training, and leveraging digital learning tools are needed to improve investment confidence and foster sustainable financial inclusion.

Copyright

© 2026 The Author(s)

Open Access

Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

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TY  - CONF
AU  - Samin Yasar Rafi
AU  - Bohi Shajahan
PY  - 2026
DA  - 2026/05/30
TI  - The Importance of Financial Literacy for Investment Decisions
BT  - Proceedings of the International Conference on Challenges and Trends in Arts and Social Sciences (ICCTASS 2025)
PB  - Atlantis Press
SP  - 4
EP  - 15
SN  - 2352-5398
UR  - https://doi.org/10.2991/978-2-38476-581-2_2
DO  - 10.2991/978-2-38476-581-2_2
ID  - Rafi2026
ER  -