When Emotions Drive Investments: The Moderating Role of Emotional Intelligence in the Financial Literacy, Investment Behavior Relationship

Humaira Imran, Nida and Quratulain Nazeer

Journal of Accounting and Finance in Emerging Economies, 2026, vol. 12, issue 1, 113-126

Abstract: Purpose: The growing relevance of Financial Literacy (FL) stems from its ability to help market stakeholders decide how to manage their investment capital. This study explored the role of financial literacy on individual investors' investment decisions in developing economies. For example, the study explains how financial literacy (FL) and investment decisions (ID) intersect with a cross-age analysis of financial attitude (FATT) as a mediator and emotional intelligence (EL) as a moderator.Design/Methodology/Approach: Data were gathered from 320 individual investors in Pakistan using the snowball and convenience sampling techniques. The study utilized a structured questionnaire. Hypotheses were tested using the Smart PLS 4.0 software with Partial Least Squares Structural Equation Modeling. The authors' hypotheses were evaluated.Findings: Financial literacy positively impacts investment decisions. Positive financial attitudes lead to greater investment outcomes and contribute to the relationship as a partial mediator. Emotional Intelligence (EI) moderates the relationship between financial attitude and influences investment decisions, and under high levels of EI, this link becomes stronger. Also, a proposed model holds for investment behavior across age groups, displaying a difference in investment behavior during the various stages of life.Practical Implications: Financial institutions, financial consultants, and individual investors in Pakistan can benefit from this research. Financial educators can assist them in improving their knowledge, financial attitude, EI, and portfolio management. Investors, in order to enhance their economic well-being, require financial literacy (FL) programs. Age-specific approaches are essential because investment behavior and mental attitude change across all stages of life.Originality/value: This study uniquely analyzes the position of positive Financial Attitude and Time Trade-off (FATT) and EI (Emotional Intelligence) within the complex relationship of Financial Literacy (FL) and Investment Decision (ID) across the age continuum. It adds to the body of knowledge distinctively, setting it apart from the rest of the literature.

Keywords: Financial Attitude; Emotional Intelligence; Investment Decisions; Financial Literacy; Age groups (search for similar items in EconPapers)
Date: 2026
References: Add references at CitEc
Citations:

Downloads: (external link)
https://publishing.globalcsrc.org/ojs/index.php/jafee/article/view/3666/1995 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:src:jafeec:v:12:y:2026:i:1:p:113-126

DOI: 10.26710/jafee.v12i1.3666

Access Statistics for this article

More articles in Journal of Accounting and Finance in Emerging Economies from CSRC Publishing, Center for Sustainability Research and Consultancy Pakistan Contact information at EDIRC.
Bibliographic data for series maintained by Rabia Rasheed ().