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Parental influence, financial literacy and investment behaviour of young adults

Deepak Chawla (Department of Decision Sciences, International Management Institute New Delhi, New Delhi, India)
Shikha Bhatia (Department of Finance and Accounting, International Management Institute New Delhi, New Delhi, India)
Sonali Singh (Department of Operations Management and Decision Sciences, Jaipuria Institute of Management, Noida, India)

Journal of Indian Business Research

ISSN: 1755-4195

Article publication date: 27 September 2022

Issue publication date: 29 November 2022

380

Abstract

Purpose

Parents are the first and leading socialization agents for young adults. It is vital to recognize the influence of perceived parental financial behaviour in shaping the financial literacy and investment behaviour of their children. In this context, this paper aims to test the perceived parental influence on financial literacy. Additionally, the direct and indirect influence of financial literacy on investment behaviour of young adults is examined.

Design/methodology/approach

This paper uses survey-based cross-sectional data. The partial least squares-structure equation model has been used to estimate and test the hypothesized relationships.

Findings

Perceived parental financial behaviour has been found to significantly impact the level of financial literacy. In turn, financial literacy positively influences the investment behaviour of young adults. Moreover, the young adults’ perception of confidence over ability to take right financial decisions drives their decision to invest.

Social implications

The results of this study imply that there is a need to have planned interventions from policymakers to ensure that young adults are financially literate. This may require introduction of planned programmes or workshops at middle or senior school levels. These programmes should help young adults understand the need for focused and long-term investing in the absence of social benefits.

Originality/value

This study is one of the preliminary works to examine the perceived parental influence on young adults’ financial literacy and further linking these with actual investment behaviour.

Keywords

Acknowledgements

The authors are thankful to the anonymous referees of the journal for their suggestions to improve the quality of the paper.

Citation

Chawla, D., Bhatia, S. and Singh, S. (2022), "Parental influence, financial literacy and investment behaviour of young adults", Journal of Indian Business Research, Vol. 14 No. 4, pp. 520-539. https://doi.org/10.1108/JIBR-10-2021-0357

Publisher

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Emerald Publishing Limited

Copyright © 2022, Emerald Publishing Limited

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