Examining the Impact of Cognitive Factors on Investors’ Financial Well-Being: An Analysis of Decision-Making Behavior and Risk Tolerance
Quarterly Journal of Securities Exchange

Quarterly Journal of Securities Exchange

Examining the Impact of Cognitive Factors on Investors’ Financial Well-Being: An Analysis of Decision-Making Behavior and Risk Tolerance

Document Type : Original Article

Author
Department of Accounting, La.C. Islamic Azad University, Lahijan, Iran
Abstract
The primary aim of this study is to examine the relationship between financial literacy, mental budgeting, and self-control with financial well-being, considering the mediating role of investment decision-making and the moderating effect of risk tolerance. The study is descriptive-survey in methodology. The data were gathered through a standardized questionnaire, with the target population comprising all individual investors in Iran's capital market during the year 2025. A total of 442 valid responses were obtained. Structural equation modeling (SEM) and Smart PLS software were employed for data analysis. The findings revealed that financial literacy, mental budgeting, self-control, and investment decision-making all have a significant positive impact on financial well-being. Investment decision-making was found to mediate the relationship between both financial literacy and mental budgeting with financial well-being, while no significant mediation was observed in the relationship between self-control and financial well-being. Regarding the moderating effect of risk tolerance, a significant interaction was only observed between financial literacy and investment decision-making. The hypotheses concerning the moderating role of risk tolerance in the relationships involving mental budgeting and self-control were not supported. These findings highlight the importance of promoting financial education, enhancing self-control, and designing investment tools aligned with varying levels of risk tolerance in improving individuals’ financial well-being.
Keywords
Subjects

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