ANTECEDENTS OF INVESTORS' RISK-TAKING PROPENSITY AND THE ROLE OF FINANCIAL LITERACY AND CAPABILITY, THINKING STYLE AND FINANCIAL BEHAVIOR: THE CASE OF TEHRAN STOCK EXCHANGE INVESTORS

Abstract

The present study aimed to explore the antecedents of investors' risk-taking propensity and analyze the role of financial literacy, financial capability, thinking style and financial behavior among the investors of Tehran Stock Exchange. The present applied research was descriptive and correlational in type. The research population was the investors of Tehran Stock Exchange. The minimum sample size was 384, and the sampling was non-randomized and convenience in type. The data collection instruments were the standard surveys developed by Molina-García et al. (2023) and Kumar et al. (2023). Their validity was confirmed through face, construct, divergent and convergent validation processes, and the reliability was also tested using Cronbach's alpha and composite reliability. For data analysis, structural equation modeling (SEM) was run in smart PLS. The present findings showed that investors' financial literacy, financial capability, and thinking style have significant effects on their financial behavior in Tehran Stock Exchange. Also, the investors' financial behavior affects their risk-taking propensity in Tehran Stock Exchange. Finally, the mediating role of investors' financial behavior in the relationship between financial literacy, financial capability, thinking style and their risk-taking propensity was confirmed in Tehran Stock Exchange.

Keywords: financial literacy, financial capability, thinking style, financial behavior, risk-taking propensity, Tehran Stock Exchange  JEL Classification: B26, G40, G53, P34