Financial literacy as a catalyst for rational investment behavior: Evidence among university students in a crisis-affected economy

Abstract

This study investigates how financial literacy functions as a determinant of rational investment behavior among university students living in a crisis-affected economy. Although young adults increasingly confront complex financial choices, their capacity to navigate investment decisions remains uneven, particularly in contexts marked by economic volatility and institutional uncertainty. Drawing on a quantitative design, data were collected through a structured questionnaire administered to university students and analyzed using descriptive statistics, reliability testing, correlation analysis, t-tests, and simple linear regression. Financial literacy was examined through three interrelated dimensions, financial knowledge, financial behaviors, and financial attitudes, while investment-related decision tendencies served as outcome variables. The results reveal that higher levels of financial literacy are consistently associated with improved financial decision-making, stronger budgeting and saving practices, greater risk awareness, and more coherent investment attitudes. Students with formal exposure to financial education exhibited significantly more rational investment behavior than those without such training. These findings underscore the role of financial literacy as a critical capability that enables young individuals to evaluate investment opportunities, manage financial risks, and adopt informed financial strategies, even under adverse macroeconomic conditions. The study offers implications for universities, policymakers, and financial institutions seeking to enhance youth financial capability. Recommendations include integrating structured financial education programs and developing targeted interventions to strengthen students’ decision-making competencies.