Abstract:
This study is designed to evaluate the impact of financial literacy on the
investment performance of household investors in Jaffna district. Financial
literacy is the independent variable, and investment decision is the dependent
variable. Independent variable is measured using numeracy, interest
compounding, inflation, time value of money, and money illusion. Financial
literacy is essential in today's advanced and complex financial nature. The
reason is that high financial literacy is linked to a country's high economic
development. If the country's citizens, whose productive population is currently
dominated by investors, are financial literate, then its economic development
can improve because the people can manage their money, especially for savings
and investments. A questionnaire was developed to collect the primary data for
this study. Survey data have been collected from 480 household investors using
the convenience sampling method because of crisis time. The reliability analysis
of the questionnaire shows an acceptable range. Regression and correlation
analysis have been done to analyze the data. Investor's performance is
significantly correlated with numeracy, interest compounding, inflation, time
value of money, and money illusion. Findings show that financial literacy
significantly impacts household investors' investment performance. Further,
this study contributes to existing knowledge in this area, regulators and
policymakers to consider these findings to take concern about the financial
literacy of individual household investors.
