International Journal of Finance & Managerial Accounting

International Journal of Finance & Managerial Accounting

Development of a Model of Financial Literacy Impacting the Decisions, Behaviors, and Financial Well-being of Capital Market Investors

Document Type : Original Article

Authors
Forouzan Mohammadi Yarijani
Saba Farzamfar
Mehrdad Ghanbari
Nahid Mohammadi
Department of Accounting, Ker.C., Islamic Azad University, Kermanshah, Iran.
10.22034/ijfma.2026.79159.2364
Abstract
The present study aims to develop a comprehensive model of financial literacy and examine its role in the decisions, behaviors, and financial well-being of investors in Iran's capital market. Considering the unprecedented growth in public participation in the capital market in recent years and the consequences arising from market fluctuations and instabilities, the need to gain a deeper understanding of the mechanisms affecting financial literacy in guiding financial decisions and behaviors is more evident than ever before. Regarding its objective, this study is applied in nature and descriptive-analytical in terms of research execution. In the first step, using a meta-synthesis method components effective on financial literacy for investors in the capital market including (a) education, skills, and personal development; (b) social, psychological, and cultural factors; (c) environment, demographics, and economic status; (d) laws, regulations, and government policies; and (e) access to informational resources were identified. These components formed the basis for designing a questionnaire to measure the variable of “financial literacy.” To measure the variables of decisions, behaviors, and financial well-being, a researcher-made questionnaire was used, which had a 5-point Likert scale and was distributed electronically and manually among 384 capital market experts. The reliability of the questionnaire was confirmed with a Cronbach's alpha to be higher than 0.70, and its content and construct validity was confirmed as well. Data analysis was conducted using Structural Equation Modeling (SEM) in Smart-PLS software. The findings showed all five components had a positive and significant impact on investors' decisions, behaviors, and financial well-being
Keywords
Financial literacy
Financial decision-making
Financial behavior
Financial well-being
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