The Effect of Stock Market Literacy on Individual Investor’s Investment Decisions: Evidence from Borsa Istanbul

Mine Berra Doganer, Ibrahim Halil Eksi, Ahmet Sit and Berna Dogan Basar
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Mine Berra Doganer: Department of Management Information Systems, OSTIM Technical University, Ankara, Turkey
Ibrahim Halil Eksi: Department of Business Administration, Gaziantep University, Gaziantep, Turkey
Ahmet Sit: Department of International Trade and Finance, Malatya Turgut Ozal University, Malatya, Turkey
Berna Dogan Basar: Department of Business Administration, Gaziantep University, Gaziantep, Turkey

Economic Alternatives, 2024, issue 1, 99-119

Abstract: In stock market investing, there are many factors that affect the decision-making process. Investors’ financial literacy is one of these factors that affect investment decisions. In this study, financial literacy regarding the stock market was determined by a questionnaire applied to 1140 individual investors and the factors that affect decision-making were clustered according to the K-means technique. Then, the effect of stock market literacy levels on investment decisions was analyzed with random forest regression. As a result of the analysis, the demographic characteristics of the investors and their stock market literacy were also associated. From the findings, it was concluded that the factors of unbiased information in the group with low stock market literacy, and the factors of advice and unbiased information in the group with high stock market literacy are effective in investment decisions.

Keywords: Demographic Features; Stock Market Literacy; Investment Decisions; K-means (search for similar items in EconPapers)
JEL-codes: G11 G53 J11 (search for similar items in EconPapers)
Date: 2024
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