V3I5P68

A Study on Financial Literacy and Its Impact on Stock Market Participation among Youth

Ruchitha B^1*, Harshith D S²

Abstract

“Financial literacy is becoming increasingly recognized as a basic life skill essential for individuals to be able to make informed and rational decisions in an ever-changing world.” The recent expansion of digital banking services, online trading platforms, and fintech innovations has opened new windows for the youth to join the stock market. Nevertheless, despite the expansion of financial services and information, the level of stock market participation among the youth is still inconsistent and lower in many developing countries due to a lack of financial knowledge, high level of risk perception, behavioral issues, and lack of hands-on investment experiences.

The primary objective of the current study is to evaluate the level of financial literacy among the youth population and its influence on their stock market participation. The research is based on primary research conducted through a structured questionnaire among the youth population. Various statistical tools such as descriptive statistics, reliability analysis, correlation analysis, and multiple regression analysis have been used for evaluating the primary research data. The research findings establish a strong positive relationship between financial literacy and stock market participation, thus confirming the role of financial literacy in building investment confidence and capability among the youth population.

Additionally, the research also establishes that educational level, income level, digital financial literacy, and investor education program exposure play an important role as determinants of youth investment behavior. The findings of the current study provide an opportunity for policy makers, financial regulators, educational institutions, and fintech companies to develop effective strategies for improving financial literacy among the youth population. Financial literacy at an early age is a potential driver for fostering capital market participation for creating long-term wealth and economic growth.

Keywords:

Financial Literacy, Stock Market Participation, Youth Investment Behaviour, Financial Education, Risk Perception, Digital Trading Platforms