Financial literacy, investment behaviour and socio-demographic variables: evidence from India

This paper examines how investment behaviour and financial literacy are interlinked and determine the impact of socio-demographic variables on the financial literacy and investment behaviour. The study uses a questionnaire to measure and understand the level of financial literacy and investment behaviour of 477 respondents in India. The study uses multinomial logistic regression to examine the survey data. The findings show that only one third of the respondents exhibits a higher level of financial literacy. The evidence also shows that financial literacy has a significant positive association with the age and income of the respondents. The results exhibit that nearly half of the respondents appear in the negative investment behaviour category. The evidence suggests that gender, residence, and work situation positively affect the investment behaviour of respondents. Regarding the linkage between financial literacy and investment behaviour, the study documents that the financial attitude- a key component of financial literacy- shows statistically significant negative influence on the investment behaviour.