Abstract:
This study analyses whether digital literacy mediates the relationship between
financial literacy and investment scam awareness. Despite the rapid expansion of
digital financial services, there remains limited knowledge of whether financial and
digital literacy interact to shape resistance to online investment scams. A crosssectional
survey was conducted among undergraduates who were selected through
stratified random sampling in Sri Lanka. Financial literacy is measured through
budgeting skills, financial attitude, financial product literacy and risk awareness.
Partial least squares structural equation modelling (PLS-SEM) was applied to
estimate the direct effects and mediating effects. Budgeting skills, product literacy and
risk awareness enhance digital literacy, while financial attitude shows no meaningful
effect. Digital literacy exhibits the strongest direct influence on investment scam
awareness. Mediation analysis confirms that digital literacy transmits the effects of
budgeting skills, product literacy and risk awareness to scam awareness, whereas
financial attitude remains non-significant. The study conceptualizes digital literacy
as a coping appraisal mechanism that enables individuals to operationalize financial
knowledge in digital financial environments. Guided by Protection Motivation
Theory, the study interprets financial literacy as supporting threat appraisal and
digital literacy as supporting coping appraisal. The single institution, cross-sectional
and self-reported design may restrict generalizability and causal inference. Future
studies should use multi-site samples, longitudinal designs, fraud simulation
experiments.
