Behavioral and cognitive determinants of digital investment app usage among young investors

Abstract

Diversifying financial innovation and understanding investors’ behavioral plasticity and cognition are crucial for financial institutions and app developers. In light of this, the study aimed to identify the primary behavioral drivers of digital investment application use among youth by assessing the mediating role of behavioral plasticity and the moderating role of investor cognition in this relationship. Grounded in the Technology Acceptance Model (TAM), Theory of Planned Behaviour (TPB), Behavioural Finance Theory, and Cognitive Load Theory, existing studies have primarily examined technology adoption and behavioural finance independently, while limited attention has been given to the integrated role of behavioural plasticity and investor cognition in digital investment application adoption among young investors. The research process began with an exhaustive review of existing literature and the development of a structured questionnaire. A structured questionnaire was administered to 410 active young investors in South India. Finally, the mediation and moderation were studied utilizing confirmatory factor analysis (CFA) to check the model fit and Structural Equation Modelling (SEM) to test hypothetical relationships among behavioral drivers, behavioral plasticity, adoption of digital investment apps, and investor cognition. The findings of this study shed light on the crucial roles that behavioral plasticity and investor cognition play in the adoption of digital investment applications. The research validates the intermediary function of behavioral plasticity in the relationship between various behavioral factors and the adoption of these apps. Furthermore, it demonstrates that investor cognition substantially enhances the positive influence of behavioral factors on the adoption of digital investment applications. This research provides various theoretical and practical implications for the study by offering an integrated behavioral framework for youth investors and Digital Investment Applications. The practical impact of this research equips financial institutions, app developers, and policymakers with actionable insights to better understand and cater to the needs of the youth demographic in the digital investment landscape. This study’s unique approach of integrating behavioral plasticity and investor cognition provides a deeper understanding of how technology and psychology interact in financial decision-making. By filling crucial gaps in the existing literature, this research offers tangible techniques to boost behavioral plasticity and investor cognition, thereby improving investors’ decision-making and providing the audience with unique and valuable knowledge.