FINANCIAL LITERACY, RISK TOLERANCE & OVERCONFIDENCE AS PREDICTORS OF INVESTMENT DECISION-MAKING: THE ROLE OF EMOTIONAL INTELLIGENCE

Abstract

The current study explores the behavioral and psychological determinants of investment decision-making in the domain of management and finance. Specifically, it examines influence of three independent variables financial literacy, risk tolerance, and overconfidence on investment decision making as dependent variable, with emotional intelligence serving as a mediating factor. Drawing upon theories of behavioral finance and decision-making, research employs survey based quantitative approach targeting individual and institutional investors. Structural equation modeling (SEM) will be used to test the hypothesized framework. This study is expected to reveal that while the financial literacy, risk tolerance and overconfidence directly shape investment behaviors, emotional intelligence acts as a crucial mediator that refines these effects by enabling investors to regulate biases, manage risk perceptions, and make rational choices. These findings will enrich the field of behavioral finance by integrating emotional and cognitive dimensions into investment research, while offering practical insights for policymakers, financial advisors, along with the investors aiming to promote sustainable practices for the sustainable development as well as the informed financial decision-making.