IMPACT OF FINANCIAL LITERACY ON STOCK MARKET PARTICIPATION

AUTHOR – MOHAMMAD SHAHID, PGDM AT GLOBAL INSTITUTE OF BUSINESS STUDIES (GIBS), BANGALORE

BEST CITATION – MOHAMMAD SHAHID, IMPACT OF FINANCIAL LITERACY ON STOCK MARKET PARTICIPATION, ILE MULTIDISCIPLINARY JOURNAL, 4 (1) OF 2025, PG. 278-288, APIS – 3920-0007 | ISSN – 2583-7230

ABSTRACT

This research explores the relationship between financial literacy and stock market participation. Financial literacy, encompassing knowledge of fundamental economic principles, investment tools, and risk management, significantly influences individuals’ willingness to engage in stock market activities. The findings highlight that individuals with higher financial literacy levels demonstrate a greater propensity to invest in equities, driven by their ability to evaluate risks and returns effectively. Conversely, limited financial literacy often leads to investment aversion due to perceived complexities and fear of financial loss. Enhancing financial education can bridge this gap, promoting broader market participation and fostering inclusive economic growth.

Keywords –Financial literacy, Stock market participation, Investment behavior, Risk management, Economic decision-making, Financial education, Equity investments, Financial inclusion.