Stock investment decision: the impacts of investor’s perceived trust, religiosity and attitude

Abstract

This paper investigates the relationship between religiosity in influencing perceived trust and attitude to invest in the Islamic stock market. In addition, this paper examines the relationship of attitude on investment decision behavior as well as the mediating role of attitude in mediates the relationship between religiosity and investment decisions as well was perceived trust and investment decisions. Using nonprobability, judgmental sampling techniques, questionnaires were collected from 247 Bursa Malaysia’s retail investors. SPSS and SmartPLS were utilized to analyze the data. All hypothesized relationships generate significant results. Religiosity and perceived trust have a significant relationship with attitude to investing in Bursa Malaysia. Attitude has a significant relationship with investment decision behavior, and religiosity has a significant relationship with perceived trust. Besides, the mediating assessment found that attitude mediates the relationship between religiosity and investment decisions. Attitude also mediates the relationship between perceived trust and investment decisions. This paper contributes to the body of knowledge in finance literature at the theoretical and practitioner level. First, it provides an empirical investigation to the body of knowledge that links religiosity and perceived trust to stock investment decisions through attitude. Second, it provides evidence on the impact of religiosity in the context of investment decisions by Muslims. Policymakers and investment institutions might benefit from this research by understanding the effect of investors' religiosity and trust on attitude to investing in the Islamic stock market and taking this as an essential factor when designing regulations and promoting the products and services.