Sustainability in Retail Investment Behaviors: A Post-COVID-19 Exploration in Emerging Economy—The Mediating Role of Financial Literacy

Muhammad Ayaz Khan (), Muhammad Shafiq (), Shrafat Ali Sair (), Aamir Sohail () and Muhammad Hasnain Ali ()
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Muhammad Ayaz Khan: University of Balochistan
Muhammad Shafiq: University of Balochistan
Shrafat Ali Sair: Hailey College of Commerce, University of the Punjab
Aamir Sohail: Thal University Bhakkar (Ex-UOS Campus)
Muhammad Hasnain Ali: Bahauddin Zakariya University

Journal of the Knowledge Economy, 2025, vol. 16, issue 1, No 121, 3462-3480

Abstract: Abstract The primary objective of this study was to investigate the investment behaviors of retail investors in Pakistan during the post-COVID-19 era, considering it as one of the emerging countries. The research explored investing behavior and its determinants among retail investors, with a focus on the relationship between financial attitude and behavior. Existing academic research has established the link between financial attitude and behavior, although the measurements of these constructs continue to vary, often being presented as a series of questions rather than statements. For this research, the population under consideration consisted of individual investors actively trading on the Pakistan Stock Exchange (PSX). To collect data from respondents, a non-probability (convenience) sampling technique was employed, using a questionnaire survey. The data obtained were analyzed using the structural equational modeling. The study’s findings revealed that retail investors exhibited all components of the financial attitude as identified in the research. Moreover, financial literacy emerged as a significant mediating variable, playing a crucial role in the relationship between retail investors’ financial attitudes and their trading activities. The implications of this study are relevant to both academics and policymakers in developing countries. Academics can utilize the findings to develop new behavioral models that can guide decision-making during unpredictable situations like the COVID-19 pandemic. By understanding the investment behaviors and their determinants, policymakers can devise appropriate strategies to enhance the resilience of financial markets and protect the interests of retail investors.

Keywords: Financial attitude; Trading behavior; Financial literacy; Pakistani Stock Market; Retail investor (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1007/s13132-024-02050-4

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