Abstract
Decisions in the stock markets are made by individuals and influenced by financial sophistication and emotions.
Accordingly, the current study investigates the impact of financial
sophistication and emotional quotient on stock market participation.
Empirical results demonstrated a positive association between
motivation and stock market participation and, counter to the
expectation, negative association between selfawareness and stock
market participation. In today’s dynamic environment, cognizant
application of financial knowledge ensures efficiency, modifies
the basic relations, and hence moderates the relationship between
self-awareness and stock market participation. According to this
study as well, financial literacy does not moderate the relationship
between motivation and stock market participation. Results are in
line with the Western settings and can be well-generalized to the
Pakistani settings, having implications at micro and macro levels
for individuals, industrial managers, Shar¯ı‘ah scholars, and Islamic
financial institutions. Study paved path for authorities of Islamic
stock markets to structure trading system supported by motivation,
self-awareness and financial sophistication of investors.
Muhammad Akhtar, Faqir Muhammad. (2017) Financial Sophistication, Emotional Quotient, and Stock Market Participation: Theory and Evidence, Journal of Islamic Business and Management, Volume 7, Issue 1.
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