Impact of Financial Literacy on Investment Decisions and Stock Market Participation using Extreme Learning Machines

TL;DR

This study explores how financial literacy affects stock market participation and investment decisions, highlighting the importance of financial education in empowering investors and improving market engagement.

Contribution

It introduces a qualitative analysis using social media data to examine the impact of financial literacy on investor behavior and stock market participation.

Findings

Financial literacy increases investment confidence.

Low financial literacy is a barrier to market participation.

Higher financial knowledge reduces susceptibility to scams.

Abstract

The stock market has become an increasingly popular investment option among new generations, with individuals exploring more complex assets. This rise in retail investors' participation necessitates a deeper understanding of the driving factors behind this trend and the role of financial literacy in enhancing investment decisions. This study aims to investigate how financial literacy influences financial decision-making and stock market participation. By identifying key barriers and motivators, the findings can provide valuable insights for individuals and policymakers to promote informed investing practices. Our research is qualitative in nature, utilizing data collected from social media platforms to analyze real-time investor behavior and attitudes. This approach allows us to capture the nuanced ways in which financial literacy impacts investment choices and participation in the stock market. The findings indicate that financial literacy plays a critical role in stock market participation and financial decision-making. Key barriers to participation include low financial literacy, while increased financial knowledge enhances investment confidence and decision-making. Additionally, behavioral finance factors and susceptibility to financial scams are significantly influenced by levels of financial literacy. These results underscore the importance of targeted financial education programs to improve financial literacy and empower individuals to participate effectively in the stock market.