Unravelling the Impact of Financial Literacy on the Intention of Indian Retail Investors to Adopt Socially Responsible Investments: The Interplay of Social Self-Efficacy as a Mediating Mechanism

Abstract

In the context of the escalating socio-economic disparities and environmental concerns, this study delves into the intricate interplay among financial literacy (FL), social self-efficacy (SSE) and intentions for socially responsible investment (SRI). Grounded firmly in the theory of planned behaviour, a survey of 235 Indian participants was conducted employing a meticulously structured questionnaire and leveraging Partial Least Squares Structural Equation Modelling software for robust data analysis. The research addresses pivotal questions, examining the impact of FL on fostering positive SRI attitudes, appraising the influence of subjective norms (SNs) on the intentions of Indian investors regarding SRI, and exploring the mediating role of SSE between FL and SRI intentions. The findings underscore the substantive role of FL in shaping positive attitudes towards SRI, exerting a direct influence on SRI propensities. Concurrently, SNs exert a comparable impact on SRI intentions. Notably, the study unravels a dual mediation paradigm, elucidating the sequential mediation of SRI attitude and SSE. The study yields pragmatic implications for fund managers and policymakers. It accentuates the strategic imperative of effective communication of investment benefits, necessitating tailored approaches attuned to cognitive and psychosocial orientations. In essence, the study augments our understanding of the nuanced dynamics guiding sustainable investment decisions, thereby advancing the comprehension of investor behaviour in the domain of responsible investing.