THE IMPACT OF FINANCIAL LITERACY AND FUTURE ORIENTATION ON INVESTMENT DECISION MAKING: EVIDENCE FROM THE WESTERN PROVINCE, SRI LANKA

Abstract

Selecting the right investment option involves making informed decisions about where to allocate funds. This is crucial for both individual financial success and for the broader economic well-being. This study examines the impact of Financial Literacy and Future Orientation on Investment Decision-Making among investors in the Western Province of Sri Lanka. Financial Literacy is tested through financial knowledge, skills, and attitudes, while Future Orientation is examined in terms of long-term and short-term orientations. The main objective of this study is to find the relationship and influence of Financial Literacy and Future Orientation on Investment Decision Making. A total of 393 responses were collected through a structured questionnaire distributed among investors in the Western Province, Sri Lanka. The analysis covers hypothesis testing, correlation testing, contingency tables, including plots and statistical summaries generated from SPSS software. The response variable, Investment Decision making, is examined through a Multiple Linear Regression model. According to the results, Financial Literacy and Future Orientation exhibit a significant positive impact on choosing investment options. Financial Attitude is identified as the top contributor of Financial Literacy for Investment Decision Making, whereas the Long-Term Orientation is discovered as a key element of Future Orientation for making investment decisions. Moreover, a positive impact is indicated by all the predictors in the regression model. The findings of the study highlight the need for policymakers, educators and financial institutions to design targeted financial literacy programs that go beyond the technical skills to emphasise understanding. Hence, having more financial understanding and competencies, along with a positive financial mindset, is better for investors to invest in the best investment opportunities.