Financial literacy and investment decision: A study from two tier city Ballari district, Karnataka

Abstract

Financial literacy, a critical skill set for managing personal finances and making informed

economic decisions, has seen an evolution in research, gradually expanding its scope to encompass a wide range of demographic and socioeconomic backgrounds.This study investigates the relationship between financial literacy and investment decisions among individuals of Ballari District, Karnataka participating in the stock market. It also examines the moderating role of “overconfidence” in this relationship.

Methods: A quantitative approach was employed using a questionnaire on financial literacy. The instrument included six sections: demographic information, factors influencing investment decisions, financial literacy, knowledge, and behavior. A total of 150 investors were surveyed.

Results: The findings reveal that investors of Ballari District possess a basic level of financial literacy, which positively influences their investment decisions.

Demographic variables showed no significant effect on financial literacy.

However, overconfidence was found to strengthen the relationship between financial literacy and investment decision-making.

Discussion: The study provides new insights into how financial knowledge and behavioral biases, such as overconfidence, jointly shape investment behavior.

These findings highlight the importance of financial education initiatives and behavioural training in enhancing investor decision-making in emerging markets like two tier cities such as Ballari in Karnataka.