IMPACT OF FINANCIAL LITERACY ON INVESTMENT BEHAVIOR: A META ANALYTIC REVIEW

DOI: https://doie.org/10.65985/APER.2026100678

Authors:

Dr. Priyanka Sharma

Keywords:

Financial literacy, Financial-Investment behavior, Stock market participation, Portfolio diversification, Objective vs. subjective literacy

Abstract:

This meta-analytic review synthesizes empirical evidence from 76 quantitative studies to examine the relationship between financial literacy and investment behavior across diverse populations and contexts. The analysis included 539 effect sizes covering over 160,000 individuals from 33 countries. Results demonstrate a significant positive association between financial literacy and investment behavior (pooled effect size r = 0.286, 95% CI [0.237, 0.334], p < 0.001). Subgroup analyses reveal that objective assessments of financial literacy yield stronger effects (r = 0.348) compared to subjective self-reports (r = 0.221). The relationship is moderated by demographic factors, with stronger effects observed in developed countries and among educated populations. Publication bias assessment indicates minimal bias in the literature. These findings provide robust evidence supporting the importance of financial literacy in promoting sound investment decisions and market participation.

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