Financial Knowledge and Investment Decision of Nepalese Investors in Stock Market

Abstract

This research observes the behavioral changes of stock market investors in Nepal based on their financial aptitude. Within this research, financial attitude (FA) and financial behavior (FB) function as connecting elements between the framework and Behavioral Finance Theory and Theory of Planned Behavior. Data for this study were collected through an online survey of 391 Nepalese investors, and the research was conducted using quantitative method. Financial knowledge received analysis through three separate sections which evaluated Financial Budgeting and Planning Knowledge (FBPK), Financial Saving and Investment Knowledge (FSIK), and Financial Products and Services Knowledge (FPSK). The authors used SmartPLS 4 for investment decision analysis and reliability tests and validity assessments showed a stable dataset. Research data indicates financial behavior together with financial attitude operate as essential mediation tools which connect financial knowledge (FK) with investment choices made by students. The investment decision (ID) process directly depends on FPSK and FSIK but FBPK shows no direct impact since FA and FB fully determine its effect. Practical financial knowledge proves to enhance decision-making through three critical outcomes that shape better attitudes and teach controlled conduct and minimize cognitive distortions. The combination between personal finance education programs and attitude development initiatives in financial learning produces the best investment choices. Low financial literacy among Nepali participants limits their market participation, making their involvement in stock market having dependent on financial education. This study provides updated insights into how FK domains influence ID by highlighting key behavioral mechanisms involved in financial choices.