Evaluating the Impact of Financial Literacy on Investment Decisions: A Case Study of Balochistan, Pakistan

Contemporary financial technologies have reshaped the global financial markets by contributing to the development of modern economies. During the past decade, the transactional complications and the risks associated with the use of and investments in emerging financial products & services have made it challenging for salaried individuals and young investors to make effective investment decisions. Thus, financial literacy is important for understanding the risks and returns associated with various financial investment options. This study examines the impact of four dimensions of financial literacy (Financial Knowledge, Financial Awareness, Financial Behavior, and Financial Attitude) on the investment decisions among the salaried class of Balochistan province of Pakistan under the moderating influence of their risk perception. By employing quantitative research, the data were collected via online surveys from 350 employees of different public and private organizations in the province. Statistical software tools were utilized for data analyses. The results revealed that all four dimensions of financial literacy had a positive and significant impact on the investment decisions of the salaried individuals of Balochistan. The results contribute to the current literature by offering an increased understanding of how to build and promote a culture of financial literacy among these individuals and thus help them make effective investment decisions. In addition to the salaried class, this study also offers valuable insights for individual investors, young entrepreneurs, and the federal & provincial governments as the policy makers so they could play their active role in their capacities and contribute to the overall economic growth of Pakistan.