A Study On The Role Of Financial Literacy And Trust On Ai In Investment Decision Making Among Investors

Abstract

During the last decade, artificial intelligence (AI) has gained traction as an information and recommendation generator for investments, but few studies have explored the relationship between financial literacy and trust in AI among the investors and how this trust influences investment decisions. This study explores the effects of FL on investment decision-making, the effects of trusting AI on investment decision-making, and the effects of selected (demographic and investment-related) characteristics on investment decision-making, such as investment experience. A quantitative survey-based research design was employed, which involved an instrument bearing a questionnaire of 25 five-point likerts comprising financial literacy, investment decision making, profit and loss appreciation, financial-literacy-driven understanding of AI, trust in AI, and financial experience of AI. Following the elimination of duplicate response items, 24 distinct responses were analysed using descriptive statistics, Cronbach's alpha, chi-square tests, one-way ANOVA and linear regression in Microsoft Excel. Financial literacy was moderate .None of the investment experiences had significant main effects, and none of the demographic characteristics had significant interaction effects with the relationship between trust in AI and decision-making on investments (p > .05). Based on the results, it appears that financial education is a better predictor of decision-making on investments among this group of investors than their reliance on AI. Small and homogenous sample makes the results preliminary and needs confirmation by further research with samples of greater size.