Abstract:
Financially literate individual investors can make smart investment decisions over complex financial
scenarios to boost their financial wealth. The aim of the study is to investigate the influence of financial
literacy on investment decisions of individual investors in Jaffna district. Further this study explores the
impact of financial knowledge, financial behavior and financial attitude on investment decisions of
individual investors. Two hundred individual investors in Jaffna district were selected as sample by using
random sampling technique and primary data was collected through a structured questionnaire.
Financial literacy consists of three dimensions namely financial knowledge, financial behaviour and
financial attitude whereas investment decisions are measured by accounting information, self/firm-image
coincidence, advocate recommendations and personal financial needs. Data was analyzed using the
techniques of correlation, regression, t-test and ANOVA. The results reveal that financial literacy
significantly positively impacts on investment decisions of individual investors in Jaffna district. The
findings recommend the necessity for effective financial literacy programs focusing especially on
enhancing financial knowledge, behaviors and attitude to facilitate informed investment decisions of
individual investors.
