Crypto Currency: An Analysis with Financial Literacy as Moderator
Keywords:Crypto Currency, Trust, Electronic Word of Mouth, Investment Intention, Perceived Risk, Financial Literacy, Moderation Effect
This research paper provides a comprehensive overview on investment intention of subjects towards crypto currency. We hypothesise that trust, electronic word of mouth, perceived risk and moderator financial literacy are the primary reasons for the increased interest in crypto currencies. An online questionnaire was framed and data was collected from 247 respondents who are well aware about digital investments, possess basic knowledge of internet and are keen in exploring more digital avenues of investments. Data analysis was carried out through two stage structural equation modelling. The findings suggested that investment intentions are significantly influenced by trust, electronic word of mouth and perceived risk. Further, financial literacy moderated the effect of electronic word of mouth and trust on investment intention. The current paper is unique and first of its kind in India where it reflects the investment intentions of subjects towards crypto currency along with the linking of trust, electronic word of mouth, perceived risk and financial literacy as moderator. Particularly, the finding of this study is one of a unique attempt to make aware about the investor intention towards crypto currency for the market and the economy.
Anbar and E. Melek, “An Empirical Investigation for Determining of the Relation between Personal Financial Risk Tolerance and Demographic Characteristic,” Ege Akademik Bakış Dergis, Vol. 10, pp. 503-522, Feb. 2010.
Lusardi and O.S. Mitchell, “Baby Boomers Retirement Security: The Role of Planning, Financial Literacy and Housing Wealth,” Journal of Monetary Economics, Vol. 54, pp. 205-224, Oct. 2007.
Lusardi and O. S. Mitchell, “The Economic Importance of Financial Literacy: Theory and Evidence,” Journal of Economic Literature, Vol. 52, pp. 5-44, April 2014.
Lusardi and P. Tufano, “Debt Literacy, Financial Experiences, And Over indebtedness,” Journal of Pension Economics & Finance, Vol. 14, pp. 332-368, October 2015.
Shankar and C. Jebarajakirthy, “The Influence of E-Banking Service Quality on Customer Loyalty: A Moderated Mediation Approach,” International Journal of Bank Marketing, Vol. 37, pp. 1119-1142, June 2019.
A. H. Dyhrberg, “Bitcoin, Gold and the Dollar – A GARCH Volatility analysis,” Finance Research Letters, Vol. 16, pp. 85-92, Feb. 2016.
A. M. Aladwani, and P. C. Palvia, “Developing and Validating an Instrument for Measuring User-Perceived Web Quality,” Information and Management, pp. 467-476, May 2002.
Wanyana, “Investor Awareness, Perceived Risk Attitudes and Stock Market Investor Behaviour: A Case of Uganda Securities Exchange,” Masters dissertation, Maker ere University, Retrieved March 12, 2013.
Keller and M. Siegrist, “Investing in Stocks: The Influence of Financial Risk Attitude and Values-Related Money and Stock Market Attitudes,” Journal of Economic Psychology, Vol. 27, pp. 285-303, April 2006.
Mayfield, G. Perdue and K. Wooten, “Investment Management and Personality Type,” Financial Services Review, Vol. 17, pp. 219-236, Oct. 2008.
C. M. Cheung and D. R. Thadani, “The Impact of Electronic Word-of-Mouth Communication: A Literature Analysis and Integrative Model”, Decision Support Systems, Vol. 54, pp. 461-470, Dec. 2012.
C. M. Cheung and M. K. Lee, “What Drives Consumers to Spread Electronic Word of Mouth in Online Consumer-Opinion Platforms”, Decision Support Systems, Vol. 53, pp. 218-225, Apr. 2012.
C. Y. Huang and Y. S. Kao, “UTAUT2 Based Predictions of Factors Influencing the Technology Acceptance of Phablets by DNP,” Mathematical Problems in Engineering, pp.1-23, Aug. 2015.
Camelia M. Kuhnen and Joan Y. Chiao, “Genetic Determinants of Financial Risk Taking,” PLOS ONE, pp. 1-4, Feb. 2019.
Ch. Kirshnudu, B. Krishna Reddy and G. Rama Krishna Reddy, “Investment behavior and risk management”, Finance India, Vol. 23, pp. 1281-1294, Feb. 2005.
Christelis, T. Jappelli, and M. Padula, “Cognitive Abilities and Portfolio Choice”, European Economic Review, Vol. 54, pp. 18-38, Jan. 2010.
D. A. Pitta and D. Fowler, “Online Consumer Communities and Their Value to New Product Developers,” Journal of Product and Brand Management, Vol. 14, pp. 283-291, Aug. 2005.
D. C. De Andrea, N. B. Ellison, R. La Rose, C. Steinfield, and A. Fiore, “Serious Social Media: On the Use of Social Media for Improving Students’ Adjustment to College,” The Internet & High Education, Vol. 15, pp. 15-23, Jan. 2012.
D. H. McKnight and N. L. Chervany, “Trust and Distrust Definitions: One Bite at a Time,” Trust in Cyber-Societies,” pp. 27-54, Jan. 2001.
D. S. Kourtidis, “Investors Trading Activity: A Behavioural Perspective and Empirical Results,” The Journal of Socio Economics, Vol. 40, pp. 548-557, Oct. 2011.
Daily News (2021, March), ‘Tesla Vehicles can be Bought using Bitcoin,” [Online]. Available: https://www.cnbc.com/2021/03/24/ elon-musk-says-people-can-now-buy-a-tesla-with-bitcoin.html.
Cha, K. Kim and J. Erlen, “Translation of Scales in Cross-Cultural Research: Issues and Techniques,” Journal of Advanced Nursing, Vol. 58, pp. 386-395, Apr. 2007.
E. Rubaltelli, G. Pasini, R. Rumiati, R.A. Olsen and P. Slovic, “The Influence of Affective Reactions on Investment Decisions,” Journal of Behavioral Finance, Vol. 11, pp. 168- 176, Aug. 2010.
E.U. Weber and W.P. Bottom, “An Empirical Evaluation of the Transitivity, Monotonicity, Accounting, and Conjoint Axioms for Perceived Risk,” Organizational Behavior and Human Decision Processes, Vol. 45, pp. 253-275, Apr. 1990.
E. U. Weber, A. R. Blais and N. E. Betz, “A Domain-Specific Risk-Attitude Scale: Measuring Risk Perceptions and Risk Behaviors,” Behavioral Decision Making, Vol. 15, pp. 263-290, Aug. 2002.
Glaser, K. Zimmermann, M. Haferkorn, M. C. Weber and M. Siering, “Bitcoin Asset or Currency? Revealing Users’ Hidden Intentions,” Conference on Information Systems, Israel, Tel Aviv, 2014, pp. 1-14.
F. Kaiser, G. Schultz, P. W. Berenguer, J. Corral-Verdugo and G. Tankh, “Extending Planned Environmentalism: Anticipated guilt and embarrassment across cultures,” European Psychologist APA Psyc Net, Vol. 13, pp. 288-297, Jan. 2008.
F. Mazzella, A. Sundararajan, V. Butt d’Espous and M. Möhlmann, “How Digital Trust Powers the Sharing Economy: The Digitization of Trust,” IESE Insight, pp. 24-31, Sep. 2016.
Roy, B. Datta and R. Basu, “Effect of eWOM Valence on Online Retail Sales,” Global Business Review, Vol. 18, pp. 198-209, Feb. 2017.
G. Spindler, “Behavioural Finance and Investor Protection Regulations,” Journal of Consumer Policy, Vol. 34, pp. 315-336, Jun. 2011.
G. R. Dowling and R. Staelin, “A Model of Perceived Risk and Intended Risk Handling Activity,” Journal of Consumer Research, Vol. 21, pp. 119 -134, Jun. 1994.
H. H. Tuu, S.O. Olsen, S. O. and P. T. T. Linh, “The Moderator Effects of Perceived Risk, Objective Knowledge and Certainty in the Satisfaction Loyalty Relationship,” Journal of Consumer Marketing, Vol. 28, pp. 363-375, Aug. 2011.
H. K. Baker, S. Kumar, N. Goyal and V. Gaur, “How Financial Literacy and Demographic Variables Relate to Behavioral Biases,” Managerial Finance, Vol. 45, pp. 121-146, Feb. 2019.
Hu and Bentler, “Cut off Criteria for Fit Indexes in Covariance Structure Analysis: Conventional Criteria Versus New Alternatives,” Structural Equation Modeling: A Multidisciplinary Journal, Vol. 6, pp. 1-55, Jun. 1999.
Sandra J. Huston, “Measuring Financial Literacy,” Journal of Consumer Affairs, Vol. 44, pp. 296-316, Jun. 2010.
C. Gu, S. C. Lee and Y. H. Suh, “Determinants of Behavioral Intention to Mobile Banking,” Expert Systems with Applications, Vol. 36, pp. 11605-11616, Nov. 2009.
Cho and J. Lee, “An Integrated Model of Risk and Risk-Reducing Strategies,” Journal of Business Research, Vol. 59, pp. 112-20, Jan. 2006.
Lee, D. H. Park and I. Han, “The Effect of Negative Online Consumer Reviews on Product Attitude: An Information Processing View,” Electronic Commerce Researchand Applications, Vol. 7, pp. 341-352, Sep. 2008.
J. Lisa Servon and Robert Kaestner, “Consumer Financial Literacy and the Impact of Online Banking on the Financial Behavior of Lower-Income Bank Customers,” Journal of Consumer Affairs, Vol. 42, pp. 271-305, Jun. 2008.
J. Matute, Y. Polo-Redondo and A. Utrillas, “The Influence of EWOM Characteristics on Online Re-purchase Intention: Mediating Roles of Trust and Perceived Usefulness,” Online Information Review, Vol. 40, pp. 1090-1110, Nov. 2016.
J. Schuchardt, S. D. Hanna, T. K. Hira, A. C. Lyons, L. Palmer, L. and J. J. Xiao, “Financial Literacy and Education Research Priorities,” Journal of Financial Counseling and Planning, Vol. 20, pp. 84-95, Jan. 2009.
J. C. Mendoza-Tello, H. Mora, F. A. Pujol-Lopez and M. D. Lytras, “Social Commerce as a Driver to Enhance Trust and Intention to use Crypto Currencies for Electronic Payments,” IEEE Access, Vol. 6, pp. 50737-50751, Sep. 2018.
J. F. Hair, R. E. Anderson, R. L. Tatham, and W. C. Black, “Multivariate Data Analysis,” Upper Saddle River: Prentice Hall, Vol. 5, pp. 207-219, Nov. 1998.
J. K. H. Nga and L. Ken Yien, “The influence of personality trait and demographics on financial decision making among Generation Y,” Young Consumers, Vol. 14, pp. 230-243, Aug. 2013.
J. R. Brown, Z. Ivkovic, P. A. Smith and S. Weisbenner, “Neighbors Matter: Causal Community Effects and Stock Market Participation,” The Journal of Finance, Vol. 63, pp. 1509-1531, May 2008.
L. J. Cronbach, “Test Validation,” R. L. Thorndike, ed. Educational Measurement. American Council on Education, Washington D. C., pp. 443-507, 1971.
Libby, Robert and Fishburn, C. Peter, “Behavioral Models of Risk-Taking in Business Decisions: A Survey and Evaluation,” Journal of Accounting Research, Vol. 15, pp. 272-292, Sep. 1977.
A. Oliva, J. P. Borondo, and G. Matías-Clavero, “Variables Influencing Crypto currency Use: A Technology Acceptance Model in Spain,” Frontiers in Psychology, Vol. 10, pp. 475-488, Mar. 2019.
Keil, B. C. Y. Tan, K. Wei, T. Saarinen, V. Tuunainen and A. Wassenaar, “A Cross-Cultural Study on Escalation of Commitment Behavior in Software Projects,” MIS Quarterly, Vol. 24, pp. 299-325, Jun. 2000.
M. T. R. Prakoso and Farida, N. Pengaruh, “Shared Value Dan Web Quality Terhadap Online Repurchase Intention Melalui Trust Sebagai Variabel Intervening (Studi Kasus Pada Mahasiswa Universitas Diponegoro Konsumen Lazada. Co. Id),” JIAB Journal Ilmu Adm. Bisnis, Vol. 7, pp. 449-455, Jul. 2018.
Catherine, K. M. Geofrey, M. B. Moya, and G. Aballo, “Effort Expectancy, Performance Expectancy, Social Influence and Facilitating Conditions as Predictors of Behavioural Intentions to use ATMs with Fingerprint Authentication in Ugandan Banks,” Global Journal of Computer Science and Technology, Vol. 17, pp. 5-21, Jan. 2018.
Eyrich, M. L. Padman and K. D. Sweetser, “PR Practitioners’ Use of Social Media Tools and Communication Technology,” Public Relations Review, Vol. 34, pp. 412-414, Nov. 2008.
Pak and M. Mahmood, “Impact of Personality on Risk Tolerance and Investment Decisions: A Study on Potential Investors of Kazakhstan,” International Journal of Commerce and Management, Vol. 25, pp. 370-384, Nov. 2015.
P. H. Schurr and J. L. Ozanne, “Influences on Exchange Processes: Buyers’ Pre-conceptions of a Seller’s Trustworthiness and Bargaining Toughness,” Journal of Consumer Research, Vol. 11, pp. 939-953, Mar. 1985.
Chaudhary and S. Bisai, “Factors Influencing Green Purchase Behavior of Millennials in India,” Management of Environmental Quality, Vol. 29, pp. 798-812, Jul. 2018.
Yadav and G. S. Pathak, “Determinants of Consumers’ Green Purchase Behavior in A Developing Nation: Applying and Extending the Theory of Planned Behavior,” Ecological Economics, Vol. 134, pp. 114-122, Apr. 2017.
R. E. Petty and J. T. Cacioppo, “The Effects of Involvement On Responses To Argument Quantity And Quality: Central And Peripheral Routes To Persuasion,” Journal of Personality and Social Psychology, Vol. 46, pp. 69-81, Jan. 1984.
R. J. Lewicki and C. Wiethoff, “Trust, Trust Development, and Trust Repair,” The Handbook of Conflict Resolution: Theory and Practice; pp. 86-107, 2000.
R. P. Bagozzi and Y. J. Yi, “On the Evaluation of Structural Equation Models”, Journal of the Academy of Marketing Science, Vol. 16, pp. 74-94, Mar. 1988.
Ahn, J. Pak, T. Song, H. Lee, J. G. Byun, D. Kang, C. S. Choi, E. Kim, J. Ryu, and M. Kim, “Low Frequency Electromagnetic Field Reduction Techniques for the On-Line Electric Vehicle (OLEV)”, IEEE International Symposium on Electromagnetic Compatibility, pp. 625-30, Jul. 2010.
Aren and A. N. Zengin, “Influence of Financial Literacy and Risk Perception on Choice of Investment,” Procedia-Social and Behavioral Sciences, Vol. 235, pp. 656-663, Nov. 2016.
S. Aren and S. D. Aydemir, “Some Considerations on Emotional Intelligence,” Journal of Global Strategic Management, Vol. 15, pp. 49-56, Jun. 2014.
S. Aren and S. D. Aydemir, “The Moderation of Financial Literacy on the Relationship between Individual Factors and Risky Investment Intention,” International Business Research, Vol. 8, pp. 17-28, May 2015.
S. Chatterjee, M. Finke and N. Harness, “The Impact of Self-Efficacy on Wealth Accumulation and Portfolio Choice,” Applied Economics Letters, Vol. 18, pp. 627-631, Jan. 2011.
S. Diacon, “Investment Risk Perceptions: Do Consumers and Advisers Agree?,” International Journal of Bank Marketing, Vol. 22, pp. 180-198, May 2004.
S. Sitkin, and L. R. Weingart, “Determinants of Risky Decision Making Behavior: A Test of The Mediating Role of Risk Perceptions and Propensity,” Academy of Management Journal, Vol. 38, pp. 1573-1592, Dec. 1995.
S. Yang, “Role of Transfer-Based and Performance-Based Cues on Initial Trust in Mobile Shopping Services: A Cross-Environment Perspective,” Information Systems and e- Business Management, Vol. 14, pp. 47-70, Jan. 2015.
S.K. Kishore and A.H. Sequeira, “An Empirical Investigation on Mobile Banking Service Adoption in Rural Karnataka,” SAGE Open, Vol. 6, Mar. 2016.
S.W. Wang, W. Ngamsiriudom and C.H. Hsieh, “Trust Disposition, Trust Antecedents, Trust, and Behavioral Intention,” Service Industries Journal, Vol. 35, pp. 555-572, Jul. 2015.
Hennig-Thurau, K. P. Gwinner, G. Walsh and D. D. Gremler, “Electronic Word-of-Mouth via Consumer-Opinion Platforms: What Motivates Consumers to Articulate Themselves on the Internet?,” Journal of Interactive Marketing, Vol. 18, pp. 38-52, Dec. 2004.
T. Nandan and K. Saurabh, “Big-five Personality Traits, Financial Risk Attitude and Investment Intentions: A Study on Generation Y”, International Journal of Business Forecasting and Marketing Intelligence, Vol. 2, pp. 128-150, Jul. 2016.
Stango and J. Zinman, “Exponential Growth Bias and Household Finance.” Journal of Finance, Vol. 64, pp. 2807-2849, Nov. 2009.
V. G. Perry and M. D. Morris, “Who is in Control? The Role of Self‐Perception, Knowledge, and Income in Explaining Consumer Financial Behavior,” Journal of Consumer Affairs, Vol. 39, pp. 299-313, Sep. 2005.
Vlaev, and P. Dolan, “From Changing Cognitions to Changing the Context: A Dual-Route Model of Behaviour Change,” Working Papers 4197 Imperial College Business School, Jan. 2009.
Bönte and U. Filipiak, “Financial Literacy, Information Flows, and Caste Affiliation: Empirical evidence from India,” Journal of Banking & Finance, Vol. 36, pp. 3399-3414, Dec. 2012.
Maneesriwongul and J. K. Dixon, “Instrument Translation Process: A Methods Review,” Journal of Advanced Nursing, Vol. 48, pp. 175-186, Sep. 2004.
W. W. Chin, A. Gopal and W. D. Salisbury, “Advancing the Theory of Adaptive Structuration: The Development of a Scale to Measure Faithfulness of Appropriation.” Information Systems Research, Vol. 8, pp. 342-367, Dec. 1997.
W.G. Kim, H. Lim and R.A. Brymer, “The Effectiveness of Managing Social Media on Hotel Performance,” International Journal of Hospitality Management, Vol. 44, pp. 165-171, Jan. 2015.
Y. F. Chen and R. Law, “A Review of Research on Electronic Word-of-Mouth in Hospitality and Tourism Management,” International Journal of Hospitality & Tourism Administration, Vol. 17, pp. 347-372, Oct. 2016.
How to Cite
Copyright (c) 2022 The Research Publication
This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.