The impact of financial risk attitude on objective-oriented investment behavior

Abstract

The purpose of this study is to examine the influence of financial risk attitude (FRA) on objective-oriented investment behavior (OOIB) of investors, particularly in underdeveloped countries, by introducing two novel constructs, namely financial satisfaction (FS) as a mediating variable and financial self-efficacy (FSE) as a moderating variable. A cross-sectional and a quantitative approach was used to collect 300 practical responses from active investors through an online questionnaire and a face-to-face interview. To test the hypothesized relationship between the constructed variables, SPSS and Smart PSL were used. According to the analysis, FRA positively impacts OOIB among Pakistani investors. Further, the moderating effect of FSE was found to be significantly positive in the relationship between FRA and FS. Additionally, FS mediates the relationship between FRA and OOIB. Accordingly, a FRA predicts FS and objective-driven investing behavior. This research will be helpful for institutional investors in providing financial services. The study is the first attempt in Pakistan to introduce FS as a mediating construct between FRA and OOIB. Furthermore, this study provides a basis for examining the relationship between FRA and FS as a moderating variable.