Interplay of Investor Cognition, Financial Literacy, and Neuroplasticity in Investment Decision Making: A Study of Nepalese Investors

Authors

  • Rachana Nepal Ace Institute of Management
  • Pradeep Rajopadhyay Ace Research Cell, Ace Institute of Management
  • Umesh Rajopadhyay Kathmandu University School of Management
  • Ujjwal Bhattarai Ace Research Cell, Ace Institute of Management https://orcid.org/0009-0005-4728-6661

DOI:

https://doi.org/10.3126/jbssr.v8i2.62133

Keywords:

investor cognition, financial literacy, risk absorption capacity, neuroplasticity

Abstract

The study examines how investor cognition and financial literacy impact neuroplasticity among Nepalese investors in stock market by assessing the mediating effect of risk absorption capacity in relation to investor cognition, financial literacy and neuroplasticity in investors. The cross-sectional data was purposefully collected from 389 respondents ranging from under 25 years to older residing in the Kathmandu valley and had previously invested in market and incurred losses. Primary data was analysed quantitatively by using SMARTPLS. The study findings indicated significant impacts of the constructs - investors’ cognition, financial literacy, and risk absorption, on investors’ neuroplasticity. Additionally, the structural model affirms that risk absorption acts as a mediator in the relationship between investors’ cognition, financial literacy, and neuroplasticity. By filling in empirical gaps and utilising social cognitive theory, this study advances our knowledge of how investor cognition, financial literacy, risk absorption capacity, and neuroplasticity impacts financial decisions, especially in developing countries like Nepal. Thus, this study stresses the eminent role of cognitive processes and financial literacy in decision-making, with the potential to assist policy formulation for equity-related financial product marketers and aid in tackling psychological trauma and reluctance among prospective investors in stock markets due to past losses.

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Author Biographies

Rachana Nepal, Ace Institute of Management

Ms Nepal is an MBA student at Ace Institute of Management. Her email is nepalrachana575@gmail.com

Pradeep Rajopadhyay, Ace Research Cell, Ace Institute of Management

Dr. Rajopadhyay is with Ace Research Cell, Ace Institute of Management. His email is pradeep@ace.edu.np

Umesh Rajopadhyay, Kathmandu University School of Management

Dr. Rajopadhyay is with Kathmandu University School of Management. His email is umesh@kusom.edu.np

Ujjwal Bhattarai, Ace Research Cell, Ace Institute of Management

Mr. Bhattarai is with Ace Research Cell, Ace Institute of Management. His email is ujjwalbhattrai7@gmail.com

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Published

2023-12-31

How to Cite

Nepal, R., Rajopadhyay, P., Rajopadhyay, U., & Bhattarai, U. (2023). Interplay of Investor Cognition, Financial Literacy, and Neuroplasticity in Investment Decision Making: A Study of Nepalese Investors. Journal of Business and Social Sciences Research, 8(2), 51–76. https://doi.org/10.3126/jbssr.v8i2.62133

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Section

Articles