Cognitive Biases and Financial Decision Making: The Role of Digital Finance and Financial Literacy
DOI:
https://doi.org/10.52223/JSSA25-060104-121Keywords:
Cognitive Biases, Financial Decision-Making, Digital Finance, Financial Literacy, PSL-SEMAbstract
Cognitive biases and their influence on investment choices are a key field of research, especially in the context of financial literacy and digital finance. Cognitive biases, which include factors such as emotions, social pressure, and heuristics, lead to deviations from norms or rationality in judgment. This research study aimed to explore the connection between financial literacy, digital finance, cognitive biases, and financial decision-making. Data were collected through structured survey questionnaires from potential investors and banking sector users within Pakistan using a convenience sampling approach—a sample size of 365 potential investors filled out the questionnaire. Suitable econometric techniques, including PSL-SEM and SPSS, were applied to estimate empirical outcomes concerning the impact of cognitive biases, financial literacy, and digital finance on financial decision-making. The findings demonstrate cognitive biases such as heuristics, overconfidence, herding, heuristics, confirmation, and anchoring have a major effect on financial decision-making. This study also uncovered that financial literacy has a strong mediation effect on financial decision-making. This study also revealed digital finance has a moderation effect on financial decision-making. This research aimed to inform investors, financial organizations, and individuals to make more informed choices.
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Copyright (c) 2025 Kinza Arif, Muhammad Hafeez, Muhammad Tayab Tahir, Sajida Parveen

This work is licensed under a Creative Commons Attribution 4.0 International License.
This work is licensed under a Creative Commons Attribution 4.0 International License.