Unveiling investment behavior: through emotional intelligence, social stigma, financial literacy and risk tolerance

Abstract

Purpose

This study examines the effects of financial literacy and financial risk tolerance on investor behavior by introducing social stigma as a mediator and emotional intelligence as a moderating factor.

Design/methodology/approach

Data is collected from 761 financially independent individual investors, with a minimum age of 25 years, a minimum of five years of stock market experience and residing in five selected major Indian cities. The collected data is subsequently analyzed using SmartPLS. Homogeneous purposive sampling followed by snowball sampling was employed.

Findings

The findings of the study demonstrate a strong and noteworthy impact of financial literacy on investor behavior. The research reveals that social stigma acts as a partial mediator and emotional intelligence plays a significant moderator with direct effects and indirect effects between financial literacy, financial risk tolerance, social stigma and investor behavior.

Research limitations/implications

Exploring emotional intelligence in financial decisions enriches academic programs by integrating it into financial education. Collaboration between academia and financial institutions yields practical tools, infusing emotional intelligence into services. This prompts systemic shifts, reshaping education and societal discourse, fostering inclusive, emotionally intelligent financial landscapes, aiming to redefine both academic teachings and real-world financial practices.

Practical implications

Integrating emotional intelligence into government-led financial literacy programs can transform societal perspectives on financial decision-making. Customized services, destigmatizing workshops and collaborative efforts with academia foster an emotionally intelligent financial landscape, reshaping traditional paradigms.

Social implications

Promoting open societal discussions about finances combats stigma, fostering a supportive space for risk-taking. Emphasizing emotional intelligence in awareness campaigns cultivates inclusivity and confidence. Normalizing financial talks empowers individuals, enhancing their well-being. Elevating both financial literacy and emotional intelligence enhances overall financial health, nurturing a community adept at navigating financial journeys.

Originality/value

This study marks a notable contribution to behavioral finance and social stigma theory by examining their intersection with emotional intelligence. It uniquely introduces social stigma as a mediator and emotional intelligence as a moderator, unexplored in this context. This novelty underscores the research’s significance, offering practical insights into financial well-being.

Peer review

The peer review history for this article is available at: https://publons.com/publon/10.1108/IJSE-08-2023-0626

Citation

Chaturvedi Sharma, P. (2024), "Unveiling investment behavior: through emotional intelligence, social stigma, financial literacy and risk tolerance", International Journal of Social Economics, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/IJSE-08-2023-0626