Shaping Investment Decisions Through Financial Literacy: Do Herding and Overconfidence Bias Mediate the Relationship?

The present study aims to answer the question of whether herding and overconfidence bias serially mediate the relationship between financial literacy with equity investors' decision-making in the Indian stock market. A survey method was deployed to collect primary data from 436 individual equity investors in the north Indian region. PLS-SEM has been used to examine the serial mediation-based model proposed for the study. Financial literacy was found to have a considerable favourable influence on individual investors' decision-making. The relationship between financial literacy and investors' decision-making was found to be serially mediated by herding and overconfidence bias. The study proposes that investors should attend financial market courses, training programs, conferences and seminars to improve their financial literacy and understanding, allowing them to overcome behavioural biases, and will improve their decision-making.