An Investigation into the Determinants of Investment Awareness: Evidence from the Young Saudi Generation

Abstract

Investment awareness enables people to make sound and effective decisions in their investment activities. It is evident that many individuals were unsuccessful in managing their investment efficiently. Thus, this study aims to be pioneering among its kind to explore and examine the determinants of investment awareness. To achieve this purpose, we develop a comprehensive quantitative model that investigates the impact of the most essential and suggested drivers of investment awareness (i.e., financial literacy, spending patterns, self-control, saving behavior, attitude toward risk, and family financial socialization). Using convenience sampling, an online questionnaire (using five-point Likert scales) was distributed to a sample of students representing the young generation aged between 18–35 years old from the School of Business and Applied College at King Faisal University. To ratify the validity and reliability of the questionnaire, a pilot test was carried out. For analyzing and interpreting that data, we utilized partial least squares structural equation modeling (PLS-SEM). The reported results of 409 responses show that financial literacy, self-control, saving behavior, and family financial socialization have positive and significant influences on investment awareness. Conversely, spending patterns and attitude toward risk are found to be positively but insignificantly related to investment awareness. These results ratify the need to formulate and implement operative actions to decrease the issue of investment awareness. This study adds to the body of knowledge on the determinants of investment awareness, specifically among the young generation (university students). Furthermore, examining the level of investment awareness could offer vital implications to policymakers, educational institutions, and families on how to enhance the awareness of young investors and support them in making good investment decisions.

1. Introduction

Many individuals endeavor to increase their income from different possible sources. To fulfill this purpose, individuals should carry out investments. This investment is considered a remarkable activity that attracts different individuals regardless of their family background, profession, education, and economic position [1]. However, the financial markets’ environment has transformed considerably. It becomes a difficult job to invest money, owing to the vast number of investment products and tools in addition to the requirements and regulations of investments. Furthermore, the need to compare diverse investment instruments, determine the amount of savings, when and where to employ and invest money, and where one can obtain financing all lead to more complexity of the investment decisions in our everyday life [2]. According to Marcolin and Abraham [3] and Binswange and Carman [4], the faster the growth in promoting financial products, the easy availability of credit, the government boosting people to be more accountable with their own investments and revenues, and the deregulation of financial markets have emphasized the importance of financial awareness. As a result, on financial markets, it is imperative to have knowledgeable investors with investment awareness. This awareness allows the investor to make sound financial and investment decisions, to realize their rights, and to manage the investment risk.

In current years, variables influencing the investment awareness of individuals represent a topic that entices the consideration of financial researchers. In this study, we examine the variables that are expected to influence the investment awareness of individuals (i.e., financial literacy, spending patterns, self-control, saving behavior, attitude toward risk, and family financial socialization). In linking the importance of these factors to investors’ awareness, for financial literacy, Mandell and Klein [5] found it to be a reason that highlights the struggles of individuals with investing. To make investment decisions, investors will face confusion in selecting the best investment opportunities; this is actually the main problem for individual investors. It is evident that many investors are ignorant and unaware concerning the avenues, guidelines, and regulations of investments [6]. In their studies, Wang [7] and Heniawan and Dewi [8] highlighted that factors such as awareness, level of income, and abilities could impact the investment of the young generation in financial tools. Jureviciene and Jermakova [9] indicated that for long-term financial stability and efficient investment decisions, financial literacy is essential. Agarwalla et al. [10] specified that financial literacy is a vital factor in increasing the understanding of investors in terms of the tradeoff between risk and return concerning the available investment opportunities to perfectly select among them. In a worryingly financialized community, financial literacy is required [11]. Dash [12] claimed that financial literacy is a crucial factor in undertaking any investment decision. The existing literature has shown that individuals who can develop their financial literacy have a better ability in planning for their financial well-being [13], including making sound investment decisions. To this end, individuals, specifically young adults, need to enhance their financial knowledge to have the ability to manage their daily financial lives and future investments.

Concerning the spending patterns factor, it has been explored as an expected predictor for investment decisions [14]. In their study, Birari and Patil [15] found that the students spend more money on fruitless things (i.e., shopping, fast food, and beauty care), and very little money is spent on purchasing books or directed to savings and investment. They indicated that there is a reduced level of awareness regarding investment, since 80% of students are not involved in any type of investment. Alekam et al. [16] revealed that spending behavior is significantly and positively related to financial knowledge. Adults need to think wisely about their spending patterns and behaviors, as they need to be aware of numerous investment opportunities existing in the market. Understanding spending among young adults is required [17] to increase their awareness of investing. Thus, it is important for individuals to manage their expenditure patterns and consider what to purchase and how much to spend so that they can later save and invest. This is actually the key for individual investors to accomplish their financial objectives. It is, therefore, important to examine the link between spending patterns and the investment awareness of young adults.

When investigating the level of investors’ awareness, it is significant to consider the self-control of individuals. Self-awareness discipline, an arranged way of life, enables individuals to comply with rules and capabilities required for their personal financial management [18]. It is evident that individuals with strong self-control have the ability to accomplish their investments, succeed in their financial aims, continually increase their savings [18], and positively impact investment decisions [19]. Furthermore, self-control is considered an underlying emotion that may impact the financial behavior of individuals [20]. Thus, self-control, as a psychological influence, can be related to the individuals’ level of investment awareness, and it is interesting to investigate it specifically within young adults such as university students. Regarding the saving behavior factor, it is a serious necessity for individuals to understand how to resolve possible future financial decisions by practicing the best financial abilities in their lives [21]. In fact, savings are the main source and first step for investing, especially through the young generation. Investors usually face some difficulties in getting external financing, but savings permit them to decrease this reliance [22]. Thus, individuals’ saving behavior is expected to be related to their investment awareness. In terms of the attitude toward risk, it is evident that the intellectual skill of an individual can be connected to their attitude concerning risk. According to Fellner and Maciejovsky [23], the risk behavior of individuals can identify their way of investing. Furthermore, behavioral factors, such as investment risk behavior, are positively related to investment awareness [24]. In real life, our attitudes toward risk influence our awareness of how to construct our investment portfolios. Mayfield et al. [25] displayed that individuals with a high tolerance for risk are more inclined to invest in short-term instruments, while those who are risk averse avoid this action. Therefore, the attitude of young adults toward risk, i.e., take the risk, avoid the risk, or be risk neutral, is interesting to investigate in relation to their awareness of investing.

Finally, it is a serious issue when adults are categorized with little financial knowledge, since this could lead them to make bad investment decisions. However, family financial socialization, i.e., parents, is a crucial factor in educating and delivering investment knowledge and financial attitudes to their children [26]. That is, family financial socialization as a kind of financial education that can be received from family and parents could be perceived as a possible driver of better investment activities. To this end, it is important to investigate the link between family financial socialization and investment awareness among the younger generation, such as university students.

There are some motivations that inspired this study. First, the increasing complication of financial services and products over the last years, besides the growing innovations in finance and investments, resulted in massive pressure and accountabilities on investors. Thus, it is important to examine to what extent investors are aware of all these developments in the markets. Second, there is a growing interest in Saudi Arabia concerning financial knowledge and investment awareness. The Saudi government decided to include a financial literacy course for the secondary stage during the academic year 2022–2023. Introducing financial education is currently essential in Saudi Arabia, as the government needs to accomplish its Saudi Vision 2030, which principally aims to improve the level of diversification in sources of income and decrease depending on oil [27]. In spite of these efforts, the level of financial awareness of Saudi individuals is still lower than in other rich countries [13]. Third, in the past five years and in line with economic issues, the Saudi government reduced its expenditures and introduced a new taxation system [28]. Hence, it is important to examine the level of Saudi individuals’ financial and investment awareness according to these decisions.

Finally, this study concentrates on examining the investment awareness among the young generation (university students) for some additional motivations: (1) the Saudi General Authority for Statistics [29] indicated that the young in Saudi Arabia between 15 to 34 years of age make up about 36.7% of the total population, (2) some studies, such as Nga et al. [30], mentioned a deficiency of financial awareness concerning the perceptions of financial planning and financial products and services among the young adults, representing a worrying trend, (3) youths, to some extent, are suggested to know alone how to decide on many financial choices when they acquire and practice some financial skills during their university life [31] and this can be considered their first time free of their family’s supervision, and (4) based on Alshebami and Aldhyani [13], the current economy requires financial awareness in order to succeed and ensure well-being amongst youths. The young generation is associated with less money management and saving practices, which adversely influence their lives besides being more reliant on the financial support of their families and government [32]. Hence, the young generation needs to have the awareness and abilities required for making their investments.

We conducted this study in the Saudi context for several reasons. First, the significance of investment awareness in encouraging better financial performance has been recognized in Saudi Arabia. However, there is a need for a study that precisely examines young Saudi adults. Alyahya [33] observed that the mainstream students in Saudi universities are financially illiterate. Furthermore, Hasler and Lusardi [34] indicated that Saudi Arabia has low averages of financial awareness, as only 34% of men and 29% of women are considered financially literate. In 2017, the Organization for Economic Co-operation and Development (OECD) reported that the degree of financial literacy of Saudi adults was found to be 9.6 out of 21, indicating a low level of financial literacy relative to comparable countries, and the lowest within the G20 countries [35]. It is also evident in their report that there is a need to advance and increase the degrees of financial literacy among individuals in Saudi Arabia, especially among young individuals between the ages of 19 and 29, who represent a high percentage of the Saudi population. Moreover, Sedais and Al Shahab [36] reported a low level of financial awareness among young Saudi individuals under the age of 37 years. Current and similar results are also found by Ali et al. [37], who reported that in spite of major changes and restructurings in the Saudi Arabian economy, financial awareness is still considered low.

Second, through Vision 2030, Saudi Arabia is rapidly moving toward a more sustainable economy by working on diversifying sources of income and preparing for the post-oil era. This important shift also depends on the ability of the people to adapt to the changes imposed by this shift at the social and economic levels. In line with the Financial Sector Development Program of Vision 2030, the Saudi Capital Market Authority (CMA) pursues to increase and improve the degree of awareness in the financial market, in addition to enhancing the financial and investment culture. Furthermore, Vision 2030 stipulates raising the savings rate to 10% in order to improve quality of life. The percentage is considered normal compared to the rest of the world. To this end, the above discussions point out the presence of an investment awareness gap in Saudi Arabia, one that needs to be bridged.

To this end, our study seeks to answer the following questions:

• What is the level of investment awareness among the young Saudi generation (university students)?
• What is the relationship between factors such as financial literacy, spending patterns, self-control, saving behavior, attitude toward risk, family financial socialization, and investment awareness?

To answer the questions of this study, we collected our data from 409 students (young adults) from the School of Business and Applied College at King Faisal University. The results show that financial literacy, self-control, saving behavior, and family financial socialization have positive and significant influences on investment awareness. On the contrary, spending patterns and attitude toward risk are reported to be positively but insignificantly related to investment awareness.

The innovations of this study are intended to advance and contribute to the current literature in several ways. First, it adds to the body of knowledge by highlighting the positive side of investment and financial awareness and its determinates as a significant issue, which has generally been ignored specifically in developing countries, including Saudi Arabia [22]. Second, prior studies [8,38] examined and focused mainly on a few variables (i.e., environment, personal interest, financial literacy) to be linked with investment awareness. However, this study is pioneering in building a comprehensive model that links several suggested variables (i.e., financial literacy, spending patterns, self-control, saving behavior, attitude toward risk, and family financial socialization) to investment awareness. Examining the effects of these variables is expected to offer unique insights into our understanding of investment awareness. Furthermore, our study is also different from those previously cited [8,38] in other ways: first, the sample population of our study is the academic field (university students), specifically business school students who have been studying some accounting, economic, and finance courses, while the sample population of previous studies consisted of individuals in cities; second, we utilized a sample size of 409 in relation to 100 in Azhar et al. [38] and 400 in Heniawan and Dewi [8]; third, the Saudi culture is different from those in Malaysia, as in Azhar et al. [38], and Indonesia, as in Heniawan and Dewi [8]. It is important to carry out this study in the Saudi context, particularly after the declaration of new initiatives and policies related to Saudi Vision 2030 [39], i.e., enhancing the financial sector, supporting financial education, and increasing savings among Saudi families. The study will inform the relevant parties on the level of investment and financial awareness of individuals and to what extent they will increase the wealth of the country. The study provides unique evidence on how the distinctive culture and socioeconomic background of Saudi individuals may impact investment awareness in the country. Furthermore, this study provides empirical evidence on the investment awareness among the young Saudi generation, which represents the highest percentage of the Saudi population (36.7% out of the total population). In view of this, our study tries to fill these existent gaps. Third, previous studies [8,38] have typically concentrated on the effect of cognitive factors, such as financial literacy, on investment awareness. However, in this study, we also add distinctive insight to the literature by examining the effect of non-cognitive variables (i.e., spending patterns, self-control, saving behavior, and attitude toward risk) on investment awareness. Fourth, this study responds to the call of some prior studies [13] and to the programs and initiatives of Saudi Vision 2030. That is, to report empirical evidence on investment awareness in Saudi Arabia is much warranted. Finally, the results of this study offer valuable perceptions concerning the investment awareness of students that may help policymakers and educational institutions articulate operative initiatives and financial education to form financial and investment awareness at an early age, i.e., among young individuals.

The rest of this study is structured as follows: Section 2 presents the literature review in addition to developing the study’s hypotheses; Section 3 discusses the study framework, procedure, participants, and measurement; Section 4 shows the data analysis and results, including descriptive statistics, measurement model and structural model, and hypotheses testing; Section 5 provides discussion on the study results; and lastly, Section 6 presents the study’s conclusion, implications, limitations, and directions for future research.

2. Literature Review and Hypotheses’ Development

2.1. Financial Literacy and Investment Awareness

Nowadays, financial literacy has turned out to be indispensable, since it can minimize the likelihood of being misinformed in making investment decisions [40]. Financial literacy is defined by Mitchell and Lusardi [41] as the capability of individuals to obtain, analyze, and interpret financial information and utilize it for making efficient and thorough financial decisions in terms of financial issues (i.e., planning, investment, and liabilities management). That is, if individuals or families want to be financially wealthy, an appropriate degree of financial literacy must be acquired.

To understand complicated financial and investment issues, financial knowledge and skills are needed [42]. Financial literacy is important for investors and individuals to allocate financial funds for investment opportunities [43]. Saber [44] indicated that the investment choices of Saudi individuals are directed by their financial awareness. Furthermore, Dash [12] and Bhushan [45] revealed that financial literacy is related to investment decisions and investment behavior, respectively.

The behavior of individuals in many issues, such as investments, can be improved by their financial management education. Azhar et al. [38] found that the investment awareness of respondents was significantly affected by their financial literacy regarding the ways of getting information, the type of investments, and how to invest. Likewise, Heniawan and Dewi [8] reported that investment awareness was significantly impacted by the respondents’ financial literacy. These results are in accordance with Azizah et al. [46], who emphasized the importance of financial literacy concerning investing money. The study of Lusardi and Mitchell [47] revealed that financial literacy allows investors to succeed in their investment and acquire higher returns. Furthermore, financially knowledgeable individuals have the ability to diversify their investments and diminish risk [48]. The financially literate individuals are also found to invest and spend intelligently, save, and borrow money wisely [49,50]. Chen and Volpe [51] stated that students who have developed financial education were more motivated to make accurate decisions regarding financial problems compared to other students with less financial literacy. Aren and Zengin [52] reported a significant association between financial literacy and investment preferences. They added that if investors have less financial literacy, they are inclined to invest in deposits. Conversely, investors with higher financial literacy prefer to invest in equities. These results are in line with Mazumdar [53], who stated that financially literate investors have a tendency to invest more in risky opportunities.

The basic proposition for the necessity of financial literacy is that a better understanding of financial matters results in improved financial management, leading to better investment awareness. That is, the higher financial literacy an individual has, the better investment awareness they will have. Based on the above discussion, we propose the following hypothesis:

Hypothesis 1 (H1).

Financial literacy has a positive impact on the investment awareness of the young Saudi generation.

2.2. Spending Patterns and Investment Awareness

Spending awareness has a vital role in certifying that the spending of individuals will be along with their financial plan [54]. Good spending patterns will inform individuals to prioritize requirements over desires [55]. Thus, spending behavior affects the personality of individuals toward investments. The enhancement of spending behavior will lead to better financial awareness [16].

Individuals may spend more [56], delay the payment of bills, and sometimes buy and discover they do not need things [57]. Nevertheless, bad financial decisions are not conducted all the time by individuals, and some individuals are more or less motivated to undertake bad financial decisions [58]. Ganatra and Joshi [59] indicated that most individuals are uninformed of their definite buying behaviors, leading to their savings at the end of the month being smaller than estimated. Luckily, in the present day, individuals have tools to follow their actual spending in a more consistent way. Thus, they can save and start thinking about investments. The youths’ spending habits have changed over the years due to Westernization and globalization. Young adults are currently spending extra money on food, lifestyle, and entertainment. Therefore, young individuals need to be educated to encourage the habit of balanced spending and enable them to invest more in investment tools, such as fixed deposits and mutual funds [60].

Garang [14] indicated that spending patterns have an insignificant influence on investment decisions but have a negative association with individuals’ wealth. Individuals should review their spending patterns, in addition to how much they should invest. This will actually lead to enhancing the awareness of investors. According to the theory of planned behavior [61], the attitude of individuals can play a role in identifying their behavior. Thus, the financial attitudes of individuals can form the way they save, invest, and spend. Managing spending and savings is very important for investments that do not appear to be important now, but it is essential in the long term. Consequently, we can articulate a hypothesis as follows:

Hypothesis 2 (H2).

Spending patterns have a positive impact on the investment awareness of the young Saudi generation.

2.3. Self-Control and Investment Awareness

According to Mpaata et al. [18], self-control represents the capability of individuals to control their requirements, estimations, and actions toward realizing particular aims, such as decreasing bad purchasing habits and developing a proper plan for retirement. To expand our knowledge of how individuals undertake financial decisions such as investment decisions, it is important to examine the psychological features that affect the positive financial well-being and financial behavior of individuals [62]. That is, there is a need to explore the link between self-control and investment awareness.

In terms of investment, Tangney et al. [20] displayed that self-control is considered the individual thinking about the accomplishment of investment decisions. In order to fulfill their financial and investment goals, individuals need good self-control [18]. The self-control–investment decisions association is found to be significant [19]. It is evident that women can better invest once they have strong self-control [19].

In their study, Strömbäck et al. [62] mentioned that individuals associated with better self-control are more expected to have improved financial behavior, save good money, and feel safer in their recent and future financial positions. This result is supported by Younas et al. [63], who reported that individuals with healthier self-control enjoy good financial behavior besides their ability to take care of their financial funds. That is, families with problems in self-control have less wealth accumulation [64]. Evidence has confirmed that the self-control of an individual could predict their intellectual and self-regulatory abilities in addition to well-being in the future life [65] as well as predicting their investment awareness. Miotto and Parente [66] found that persons with developed self-control and inclinations to plan their futures can manage their investments better.

In agreement with the hypothesis of the behavioral life-cycle that has been formalized by Shefrin and Thaler [67], individuals’ financial behaviors during their lives are identified by their capability to control desires and the costs associated with practicing such self-control. It is suggested that young adults who have better self-control should have developed financial conduct and have a better ability to handle their investments and finances, hence increasing their investment awareness. Following the above discussion, we formulated the following hypothesis:

Hypothesis 3 (H3).

Self-control has a positive impact on the investment awareness of the young Saudi generation.

2.4. Saving Behavior and Investment Awareness

In real-world life, investment is related to saving and delaying consumption. To invest, savings represent an indispensable basis, which in the end results in the development and expansion of the economy [68]. In the same vein, Mugo [69] revealed that saving activity is a requirement for making investment decisions. Individuals sometimes need external sources of finance to conduct investment; however, savings enable them to reduce their dependence on such sources.

In line with Denton [70], saving behavior represents a combination of possible needs, choices of saving, and conduct that leads to wealth creation. Mpaata et al. [18] stated that saving money is a fundamental necessity for people to enable them to solve tough financial decisions in their lives. Saving money provides a means of control in the ways of individuals’ consumption and their awareness of how to spend their money wisely [71]. In their study, Ali et al. [72] revealed that a lack of self-control significantly and negatively moderated the relationship between financial literacy, saving behavior, and investment awareness. Indeed, the behavior of saving needs individuals to have important abilities, which involve the skill to make calculations and build a saving policy [73].

The theory of social cognition for Bandura [74] assumes that knowledge and learning is a procedure that takes place in a social environment. It clarifies how environmental variables affect individuals all over their lives. The theory suggests that individuals’ behaviors can be impacted by their environments. This supports the need for understanding financial management and thus enhancing saving behavior, as well as skills and awareness of investments. Consequently, saving is a conduct that can strongly influence investment decisions. Therefore, we state the following hypothesis:

Hypothesis 4 (H4).

Saving behavior has a positive impact on the investment awareness of the young Saudi generation.

2.5. Attitude toward Risk and Investment Awareness

The attitude of investors toward risk is significantly related to the allocation of investments between risky and safe assets [14]. That is, individuals preferring low risk are more inclined to invest in saving accounts, whereas individuals with the ability to take more risk prefer investments in risky assets such as stocks. Lim et al. [75] reported a negative connection between risk aversion of investors and investment intention. Individuals with high investment awareness should have the abilities needed to manage the risk.

Risk and its nature, besides how people approach this risk, have been an evolving debate. The risk attitudes of individuals may influence their performance in a wide range of actions [40], including investment decisions. Financial risk attitude, as defined by Ye and Kulathunga [76], refers to the level to which the person is encouraged to hold risky financial opportunities with unidentified outcomes. How people approach hazardous decisions is different, and these discrepancies are often clarified by dissimilarities in risk attitude [77]. This will lead to different kinds of investors, i.e., risk-averse, risk-neutral, and risk-seeking. Thus, examining the tolerance toward risk of individuals (the highest degree of fluctuation in return that investors are ready to accept) will lead to understanding individual behavior [78].

Individuals with robust cognitive capacities are more inclined to select riskier investments [79]. However, for investments in the stock market, Van Rooij et al. [80] reported that those with low knowledge and awareness were not inclined to invest in stocks. The awareness of risk, besides the degree of financial knowledge, impacts individuals’ preferences for investment. Whereas risk-averse investors are more inclined to invest in deposits, investors with a great inclination for risks select investments such as equities and foreign exchanges [52]. As stated by the theory of planned behavior [61] and reasoned action [81], it is recognized that subjective norms and attitudes form the possibility of risky behavior incidence. Particularly in uncertain circumstances, risk-taking is essential for those who make decisions, such as investors. Therefore, we expect a link between the attitude toward risk and the awareness of investors. The following hypothesis is formulated:

Hypothesis 5 (H5).

Attitude toward risk has a positive impact on investment awareness among the young Saudi generation.

2.6. Family Financial Socialization and Investment Awareness

Agarwalla et al. [10] advocated that the financial discipline and income level of families may influence the financial awareness of their children. The investment decisions of individuals can be affected by their confidence in information received from social interaction, such as family [82]. Parents who share information with other members in the family concerning investment awareness and proficiencies may enhance and encourage other non-participant members in investments to participate [83].

Financial behaviors can be effortlessly transferred from parents to their children through financial socialization. From a young age, children obtain the ability to solve financial issues through their families via diverse socialization practices, including observing their parents’ financial behavior or talking with them concerning financial and investment matters [84]. In this manner, young adults improve their financial abilities and competences that raise their financial independence and awareness. Nevertheless, only a few studies have investigated family financial socialization practices [58]. Therefore, to bridge this gap, in this study, we examine the role of family financial socialization in enhancing the investment awareness of youths.

Family socialization is inevitable in directing and advising their children to move from illiteracy to financial literacy [71]. Jorgensen [26] specified that parents are supposed to have a positive effect on the financial awareness and attitudes of their children. In their study on the relationship between experiences of financial socialization and advantageous financial activities in young childhood, Kim and Chatterjee [85] showed that having a savings account throughout childhood is positively linked with owning financial assets in adulthood. Good financial behaviors during childhood could continue and impact their investment decisions and awareness. In a recent study by Mpaata et al. [21], financial literacy was found to be impacted by social factors.

The theory of social learning shows how young adults’ financial activities are impacted by their social environment, such as their families. This theory has established that young adults advance their experience in financial issues through observations and thoughtful guidelines from their parents [86]. Thus, financial education received from families in childhood can positively influence succeeding financial decisions in life, such as investment. In particular, we assume that family financial socialization will positively contribute to enhancing investment awareness. Subsequently, we articulate the following hypothesis:

Hypothesis 6 (H6).

Family financial socialization has a positive impact on the investment awareness of the young Saudi generation.

3. Methodology

3.1. Study Framework

The study framework is depicted in Figure 1 with the relevant independent variables (financial literacy, spending patterns, self-control, saving behavior, attitude toward risk, and family financial socialization) and dependent variable (investment awareness). The relationships shown in the figure are suggested to estimate the study’s theoretical framework, as hypothesized above.

3.2. Procedure

This study was carried out at the School of Business and Applied College, King Faisal University in Saudi Arabia, a country with a growing economy and where the young generation represents the majority of its population. Furthermore, one imperative program of the Saudi Vision 2030 is the Financial Sector Development Program, which aims to advance a well-diversified financial sector and encourage savings intended at growing the savings rate of Saudi families as well as the financial awareness in the country. Saudi students are supposed to obtain massive support concerning savings, financial, and investment awareness.

The target population of this study was the students (young generation) of the School of Business (master’s and bachelor’s degree students) in addition to the diploma students at the Applied College, who are taking business courses and can move to the School of Business to finish their bachelor’s degree. The study’s respondents have studied some finance and accounting courses. We did this in line with many prior studies (i.e., [25,87,88]). These participants can respond and understand well to the questions concerning investment awareness and its suggested determinants owing to their estimated level of financial knowledge [89]. The study’s respondents received an online questionnaire designed using Google Forms. Before sending the questionnaire to respondents, we translated it into Arabic, as we adopted all measurements from English sources. The translated questionnaire was checked to ensure the validity and trustworthiness of the instrument. In this study, convenience sampling has been employed attributable to its benefits in reaching participants of the questionnaire in addition to saving cost, effort, and time [13]. The link to the questionnaire was sent to students using university electronic mails, university Blackboard, and WhatsApp groups. To ensure privacy protection, an introductory section was prepared at the beginning of the questionnaire. The survey was sent to the respondents of the study and continued to be accessible online for around one month. We received and collected 409 responses during June 2022.

3.3. Participants

As mentioned above, we received and collected a total of 409 respondents, which represented the sample size of our study that we employed in the final analysis. As presented in

Table 1. Demographic information of the respondents (n = 409).

Variable	Category	Frequency	Percentage
Gender	Male	213	52.1
	Female	196	47.9
Marital status	Married	84	20.5
	Single	325	79.5
Age	Less than 20 years	76	18.58
	21 to 25 years	269	65.77
	26 to 30 years	38	9.29
	Above 30 years	26	6.36
Educational level	Diploma	42	10.3
	Bachelor’s	335	81.9
	Master’s	32	7.8
Annual Income	Less than 10,000 SR	301	73.6
	11,000 to 20,000 SR	56	13.7
	More than 20,000 SR	52	12.7
Savings Possibility	Less than 5000 SR	295	72.1
	5000 to 10,000 SR	59	14.4
	11,000 to 20,000 SR	18	4.4
	More than 20,000 SR	37	9.1
Investment experience	Less 1 year	306	74.8
	1 to 2 years	63	15.4
	More than 2 years	40	9.8

, around half of our survey’s respondents were male (52.1%), and it was observed that the highest percentage of students (79.5%) was single. The highest percentage of students was in the age group of 21 to 25, representing 65.77% of the respondents. Additionally, as can be seen from Table 1, 81.9% of participants were in a bachelor’s program. This was expected, as the master’s programs include few students and some programs only started one or two years ago. In addition, the diploma represents only the students at the Applied College who can join the School of Business to finish their bachelor’s degree. Most of our respondents have an annual income of less than 10,000 SR (73.6%), and this is related to the fact that most of the sample are bachelor’s students who have only monthly financial support from the university and their own income. Thus, the effect is clear for the category related to savings possibility, as the dominant group of students (72.1%) saved less than 5000 SR. Finally, the student group with investment experience of less than one year was the highest (74.8%).

3.4. Measurement

The dependent variable of this study, investment awareness (IA), was measured with nine items adopted from previous studies [38,90]. A greater scale specifies greater investment awareness for the respondents. The measurements of independent variables are as follows: The measures for financial literacy (FL) (11 items) have been adapted from the studies of [21,38,91,92]; Spending patterns (SP) are measured with five items that are adopted from [93]; The seven items used to measure self-control (SC) have been adapted from [14,64]; The scales used for measuring saving behavior (SB) (eight items) were adapted from prior work [10,21,71]; Attitude toward risk (AtR) was measured by 13 items that have been adapted from the previous work of [25,78,90,94,95]; Finally, family financial socialization (FFS) was measured by six items that have been adopted from the previous work of [21,71]. The responses to all survey items were scored on a five-point Likert scale, which ranges from (1) “strongly disagree” to (5) “strongly agree.” A list of all items employed in this analysis is presented in Appendix A.

4. Data Analysis and Results

4.1. Descriptive Statistics

The descriptive statistics values are illustrated in

Table 2. Descriptive statistics.

Variable	n	Minimum	Maximum	Mean	Std. Deviation	Variance
Investment Awareness (IA)	409	1.00	5.00	3.85	0.703	0.495
Financial Literacy (FL)	409	1.00	5.00	3.68	0.815	0.664
Spending Patterns (SP)	409	1.00	5.00	2.77	0.969	0.939
Self-Control (SC)	409	1.00	5.00	2.61	1.060	1.123
Saving Behavior (SB)	409	1.00	5.00	3.41	1.062	1.127
Attitude toward Risk (AtR)	409	1.00	5.00	3.04	0.665	0.442
Family Financial Socialization (FFS)	409	1.00	5.00	3.69	0.885	0.784

. The minimum and maximum values for all variables are 1 and 5, respectively. The mean score for investment awareness is 3.85, with the lowest standard deviation of 0.703. In general, the results showed that the level of investment awareness among the students of the School of Business and Applied College at King Faisal University is at a reasonable level. This is in accordance with Sabri et al. [31], who stated that school life represents the first time of financial independence for students without their family supervision. Whereas the maximum mean value was reported to be 3.69 for family financial socialization, the reported minimum mean was 2.61 for self-control. The results specified an agreement among the study’s respondents concerning the significance of family financial socialization in enhancing students’ investment awareness. In the same way, the standard deviations of the responses were reported to be between 0.703 and 1.062.

4.2. Results of Structural Equation Modelling

Consistent with Hair et al. [96], structural equation modeling (SEM) is recognized as a vital instrument in the area of social sciences. Partial least square structural equation modeling (PLS-SEM) is a testing technique that is broadly utilized. When analyzing a hypothetical framework from the prediction perception and exploratory study, PLS-SEM is considered a suitable choice. Furthermore, according to Hair et al. [96], PLS-SEM is better in examining complex models, causal associations, and data that are non-normal and appropriate for small samples. Accordingly, PLS-SEM was adopted in this study.

To examine the model of this study and achieve its objective, we follow Hair et al. [96] and utilize the two-stage method, i.e., assessment of the measurement model and examination of the structural models.

4.2.1. Measurement Model

To assess the measurement model, we followed three steps. First, we examined the reliability of the indicators by comparing their loading values. These loading values are better to be above 0.70, as suggested by Hair et al. [96], to certify that each indicator is adequately dependable and can explain 50% of its variance. However, we observed some indicators with loading values less than 0.70. Thus, we deleted some of them to increase the study’s composite reliability. On the other hand, it is suggested that indicator loading values that are lower than 0.70 can be kept and not removed, unless eliminating them will increase the study’s composite reliability [13]. According to Hair et al. [97], if the item loading values are within 60–70% for an explanatory study, they are deliberated as satisfactory values; nonetheless, values lower than 40% need to be eliminated.

Table 3. Reliability and validity results (n = 409).

Construct	Items	Loadings	Cronbach’s Alpha (CA)	Composite Reliability (CR)	Average Variance Extracted (AVE)	Source of Construct
Investment Awareness	IA3	0.536	0.773	0.848	0.532	[38,90]
	IA6	0.731
	IA7	0.780
	IA8	0.808
	IA9	0.758
Financial Literacy	FL2	0.534	0.882	0.906	0.519	[21,38,91,92]
	FL3	0.730
	FL4	0.684
	FL5	0.689
	FL6	0.686
	FL7	0.797
	FL8	0.824
	FL9	0.792
	FL11	0.709
Spending Patterns	SP1	0.734	0.814	0.868	0.570	[93]
	SP2	0.811
	SP3	0.824
	SP4	0.764
	SP5	0.626
Self-Control	SC1	0.828	0.918	0.933	0.666	[21,71]
	SC2	0.791
	SC3	0.751
	SC4	0.894
	SC5	0.819
	SC6	0.831
	SC7	0.791
Saving Behavior	SB1	0.741	0.911	0.928	0.616	[10,21,71]
	SB2	0.795
	SB3	0.781
	SB4	0.818
	SB5	0.773
	SB6	0.800
	SB7	0.811
	SB8	0.759
Attitude toward Risk	AtR10	0.690	0.778	0.857	0.600	[78,95]
	AtR11	0.793
	AtR12	0.813
	AtR13	0.797
Family Financial Socialization	FFS1	0.726	0.814	0.865	0.518	[21,71]
	FFS2	0.720
	FFS3	0.798
	FFS4	0.689
	FFS5	0.748
	FFS6	0.624

shows that some items have been removed owing to their low loadings.

Second, the reliability of internal consistency has been examined using both Cronbach’s Alpha (CA) and Composite Reliability (CR). The greater the CR of the constructs, the higher their reliability will be. The values of CA and CR should go above 0.70 [96]. All values of CA and CR in Table 3 are in accordance with the suggested values and surpass the cut-off points. For convergent validity, we employed average variance extracted (AVE). The AVE values for every construct should surpass the threshold of 0.50. Again, the reported results in Table 3 display that all AVE values are consistent with the suggested values.

Finally, to display the level to which every construct is different from the others and validate the discriminant validity, we utilized the Fornell and Larcker [98] criterion as suggested by Hair et al. [96]. The results reported in

Table 4. Correlation and discriminant validity.

Construct	AtR	FFS	FL	IA	SB	SC	SP
Attitude toward Risk (AtR)	0.775
Family Financial Socialization (FFS)	0.311	0.720
Financial Literacy (FL)	0.330	0.475	0.721
Investment Awareness (IA)	0.349	0.457	0.701	0.729
Saving Behavior (SB)	0.243	0.434	0.510	0.457	0.785
Self-Control (SC)	0.214	0.053	−0.100	0.117	−0.118	0.816
Spending Patterns (SP)	0.268	0.104	0.055	0.187	−0.006	0.705	0.755

indicate that the AVE square root for every construct is greater than the correlations of any other construct. This result shows that the constructs of the study have satisfactory discriminant validity.

4.2.2. Structural Model and Hypotheses Testing

Subsequent to the establishment of the measurement model, the structural model was examined according to three central standards as indicated by Hair et al. [97] (i.e., R² values, the study model’s predictive relevance, and finally the path coefficient’s level of significance). First, R² is computed as the overall explanatory power concerning the effect of independent variables on investment awareness. The R² value of investment awareness is found to be 0.554, representing that 55.4% of its variance is explained by financial literacy, spending patterns, self-control, saving behavior, attitude toward risk, and family financial socialization. The R² value is substantial and surpasses the level of 0.26 recommended by Cohen [99]. Along with this result, the frameworks in this study’s model are proficient in explaining investment awareness. Second, the values of cross-validated redundancy were employed to evaluate the consistency of the study’s model. To do so, the SmartPLS blindfolding method has been used. The findings of blindfolding reported in

Table 5. Construct cross-validated redundancy.

	SSO a	SSE b	Q2 (=1 − SSE/SSO)
Attitude toward Risk	1636.000	1636.000
Family Financial Socialization	2454.000	2454.000
Investment Awareness	2045.000	1464.828	0.284
Financial Literacy	3681.000	3681.000
Saving Behavior	3272.000	3272.000
Self-Control	2863.000	2863.000
Spending Patterns	2045.000	2045.000

^a: SSO = Sum of Squares of Observations (SSO); ^b: SSE = Sum of Squares Errors.

show that the value of cross-validated redundancy surpasses zero with a value of 0.284. This result is in line with the value recommended by Fornell and Cha [100]. That is, the results in Table 5 confirm the predictive efficiency and quality of our study model.

Third, to ratify the acceptability of our model and test the hypotheses, the path coefficient in addition to their significance were analyzed.

Table 6. PLS-SEM results of hypothesis testing.

Hypothesis	Relation	Beta	Std. Error	t-Value	p-Value	Decision
1	Attitude toward Risk → Investment Awareness	0.056	0.037	1.523	0.128	Rejected
2	Family Financial Socialization → Investment Awareness	0.097	0.042	2.304	0.021	Accepted
3	Financial Literacy → Investment Awareness	0.591	0.040	14.739	0.000	Accepted
4	Saving Behavior → Investment Awareness	0.119	0.043	2.751	0.006	Accepted
5	Self-Control → Investment Awareness	0.161	0.063	2.547	0.011	Accepted
6	Spending Patterns → Investment Awareness	0.017	0.050	0.338	0.736	Rejected

and Figure 2 show the results of bootstrapping. Table 6 displays that financial literacy has a significant and positive impact on investment awareness at 0.01 (β = 0.591, t = 14.739, p < 0.01); consequently, our first hypothesis (H1) is supported. Conversely, spending patterns were revealed to positively impact investment awareness but with an insignificant relationship, thus rejecting the second hypothesis (H2). The effect of self-control on the level of investment awareness was reported to be positive and significant (β = 0.161, t = 2.547, p < 0.05), consequently supporting the third hypothesis (H3). The influence of saving behavior on the level of investment awareness was also established to be positive and significant (β = 0.119, t = 2.751, p < 0.01), hence supporting our fourth hypothesis (H4). On the other hand, attitude toward risk has a positive but insignificant influence on the level of investment awareness, thus rejecting the fifth hypothesis (H5). Finally, Table 6 displays a positive significant association between family financial socialization and level of investment awareness (β = 0.097, t = 2.304, p < 0.05), approving our sixth hypothesis (H6).

5. Discussion

As a developing market economy, Saudi Arabia needs to make intelligent financial decisions across all levels of society in order to decrease the dependence of the country on oil as the key basis of income [31]. For this aim to be achieved, operative cooperation between the government and financially literate individuals is required. Investment awareness is essential for enhancing the well-being of individuals, mainly among the young generation (students). Thus, examining the level of investment awareness is an important issue that needs to be addressed. Using a comprehensive model, this study offers remarkable insights into our knowledge on investment awareness and its suggested determinants, i.e., financial literacy, spending patterns, self-control, saving behavior, attitude toward risk, and family financial socialization.

Our developed hypotheses have been examined, and it was found that all were supported with the exception of hypotheses two (spending patterns) and five (attitude toward risk). First, the results established that financial literacy is significantly and positively associated with investment awareness. These results suggest that our respondents (students) are better involved in investment activities as they become more aware of issues such as investment opportunities, the significance of investment for the future, the opportunity for investment to provide additional income, and the ability to browse websites on investment. The results also emphasize the significance of financial literacy concerning understanding and managing money, leading to better financial well-being and making sound investment decisions. On the empirical front, these results are in accordance with those of previous work [8,38,46], who proposed that financial literacy can be a significant predictor of investment awareness among individuals. In the Saudi context, the results are in line with those of Saber [31] in that the degree of financial literacy in Saudi Arabia is crucial to the practice of wealth creation and directing the choices of many individuals’ investments. The results provide support to Sulphey and Faisal [42], who claimed that more qualified individuals typically hold the essential skills to recognize complex material related to financial concerns such as investments. Similarly, many other prior studies confirmed our results, such as Dash [12] (financial awareness has a positive outcome on investment decisions), Bhushan [45] (investment awareness mainly related to individuals’ financial literacy), and Qureshi et al. [101] (financial literacy is found to be a key determinant for investors’ awareness).

Second, the results show that spending patterns are not significantly related to investment awareness. These findings show that the habits of our students in terms of spending (i.e., buying things even when they do not want them, buying things even when they did not have plans to buy them, and inability to ignore sales signs in shop windows and displays) can reduce their investment awareness. Our results are in line with those found by Garang [14] in that spending patterns have an insignificant outcome on investment decisions. In relation to personal wealth, Garang [14] also reported that spending patterns have a weak significance. He indicated that spending patterns require more control when it comes to the growth of personal wealth and management. In the same vein, Alekam et al. [16] reported that the attitude of individuals in terms of overspending could impact their behavior toward financing issues, resulting in difficulties in financial planning. Ramli et al. [17] claimed that the awareness of spending behavior among adolescents necessitates improvement to encounter the fast trend of online purchasing via shopping applications.

Third, our results show that students with improved self-control are related to more investment awareness. These indicate that our students, to some extent, are likelier to control their spending when they obtain money, save some money, break down bad behaviors, and try to achieve the financial goals they made. Thus, students have some intentional self-financial regulation. These results lend support to the hypothesis of the behavioral life-cycle. Similar results have been reported in prior studies [18] that individuals with strong self-control have the ability to succeed their finances professionally and accomplish their financial goals. Indeed, self-control will enhance the behavior of individuals in many issues, such as investments, decreasing bad habits of spending, and constructing good plans for retirement [102]. Likewise, Iram et al. [19] indicated that self-control is significantly related to women’s investment decision processes. That is, self-control is the primary emotion in the accomplishment of individuals’ investment choices [20].

Fourth, our results also show that the saving behavior of university students has a significant and positive relationship with their investment awareness level. Findings show that our students are more inclined to save more money, save for the expenses of living, save for the obligation in the future, save money as a source of income in the future, and plan to decrease their disbursements. Thus, saving behavior is a serious necessity for young adults to help them resolve prospective financial decisions in the future. These results provide support for the theory of social cognition. It also supports the claim of Alshebami and Al Marri [22] that saving represents an essential element for individuals, as it leads to business creation via investments. They added that saving permits individuals to face financial challenges in the future, i.e., investments and potential risks. Individuals consider savings as a source of financing, and they do reinvest these savings in future investments [103].

Fifth, the result concerning the attitude toward risk is shown to be positive but insignificantly related to investment awareness. The findings reveal that our students may face some problems in recognizing the actual risk linked with the selections of investments they can make, and thus, face difficulty to match opportunities of investments to their preferred degree of risk exposure. In fact, the attitude toward risk seems to be related to experience, which is still small with the young generation, such as university students. Our results are in line with Aydemir and Aren [95], who found that risk aversion has a negative influence on investment intention, and Van Rooij et al. [80], who reported that individuals with less knowledge and consciousness were not motivated to invest in stocks, as they are considered risky investments. The results lend partial support to the theory of planned behavior in that subjective standards and attitudes construct the likelihood of risky behavior occurrence.

Finally, this study reported that family financial socialization has a significant and positive influence on the level of investment awareness. That is, family financial socialization directs students to have advanced levels of investment awareness. The results confirm the significant role of family in enhancing their children’s financial knowledge and helping them to manage and invest their money. In fact, families are considered the key source of financial instruction and inspiration for their children from childhood to old age. Our results support the theory of social learning. The results are also in line with those of Agarwalla et al. [10], who advocated that the involvement of family in businesses enables their children to be better aware of principles related to personal finance. In the same way, Li [83] established that families with investing members impacted other family members who were not investing to participate in the investments. Furthermore, Kaur and Vohra [104] indicated that the impact of family members is one of the greatest elements of investment behavior. Additionally, those who are able to enhance their financial literacy from their family are better at investing their cash [18].

6. Conclusions, Implications, Limitations, and Directions for Future Research

The main purpose of this study is to examine the level of investment awareness among the young Saudi generation, i.e., university students. The vast majority of the population in Saudi Arabia is made up of youths. Thus, establishing an investment-literate generation who is ready to act positively with society concerning financial and investment practices is a crucial issue. Investment awareness allows young individuals to efficiently manage and invest their money, make sound and correct investment decisions, have good financial behavior, and utilize accessible investment products and services.

Using a sample of 409 students from the School of Business and Applied College at King Faisal University, we examined the determinants of the investment awareness level among these students. Specifically, we investigated the relationship between financial literacy, spending patterns, self-control, saving behavior, attitude toward risk, family financial socialization, and investment awareness level. The results show that financial literacy, self-control, saving behavior, and family financial socialization have a positive and significant impact on students’ investment awareness level. That is, students who are financially literate will be able to invest their money better than others, and they will have the ability to evaluate investment options. Furthermore, students with good financial behaviors, i.e., saving and financial self-control, will be better at directing their personal finance and will have a successful youth life. Financial self-control can enable students to standardize their habits regarding spending, savings, and investing. Saving behavior will help students figure out their financial and investment problems in the future. For family financial socialization, families should educate their children about financial and investment matters and enhance their financial proficiencies. By doing this, they will certify that their young adults will have a fruitful life later. On the other hand, the results show that spending patterns and attitude toward risk did not significantly impact the investment awareness of the students. Overall, the university students showed a reasonable level of investment awareness.

6.1. Implications

This study can be considered one of the few available studies to examine the perception of financial literacy and investment awareness in the Saudi Arabian context. Thus, the study contributes to the prevailing body of knowledge by offering innovative evidence on the influence of financial literacy, spending patterns, self-control, saving behavior, attitude toward risk, and family financial socialization on investment awareness, for the aim of clarifying the level of investment awareness among the young Saudi generation (university students), as follows:

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The level of investment awareness among the students of the School of Business and Applied College at King Faisal University is at a reasonable level.

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Financial literacy, self-control, saving behavior, and family financial socialization are significant predictors of investment awareness level.

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The results of this study provide support for the theory of social cognition and the hypothesis of behavioral life-cycle.

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The results of this study fill the existent gap in the literature, as there is a scarcity of evidence on investment awareness in developing countries, particularly Saudi Arabia.

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The study examines a comprehensive model that includes several suggested determinants for investment awareness.

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This study is unique, as it includes both cognitive factors (i.e., financial literacy) and non-cognitive variables (i.e., spending patterns, self-control, saving behavior, and attitude toward risk) as determinants for investment awareness.

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This study responds to the calls of some prior studies, the Financial Sector Development Program of Vision 2030, and other initiatives, such as the “The Smart Investor” by the Saudi Capital Market Authority.

The findings of this study offer further practical implications to several stakeholders. Policymakers may conduct suitable interventions via regulations, initiatives, and guidelines to make sure that actions are in place to enhance financial literacy and investment awareness among young people, particularly university students, with the purpose of helping them acquire the skills and knowledge related to financial matters. Furthermore, the Ministry of Education and its educational institutions may develop and establish an operative financial education through class courses, training programs, conducting seminars, organizing campaigns, and conducting workshops that are all directed toward enhancing the financial knowledge level and investment awareness among students of universities. In addition, public authorities and universities may invite families when organizing financial workshops, campaigns, and talks to enhance the communication of financial problems between families and their children in an influential approach. For families, it is recommended to involve their children in the discussion about daily financial matters and decisions, emphasizing the significance of saving, regulating their disbursements to the limitation of budget and investing at an early age.

6.2. Limitations and Directions for Future Research

Notwithstanding the perceptions provided by our study, there are some limitations. We carried out this study in an academic setting; therefore, future studies may target other fields such as work environments to enable more generalization of the results. Furthermore, this study was conducted on a sample of Saudi students. Thus, it is difficult to generalize the results to other countries except for the countries of the Gulf Cooperation Council (GCC), as they have similar contexts, economic factors, and cultures. For that, this study calls for additional investigation into investment awareness in other countries with diverse cultures and economic conditions. Additionally, the size of our sample may be small and was focused on two schools of the university; thus, future studies may utilize a bigger sample size to reflect a broader representation for the population. Future studies may explore other factors that could impact investment awareness among the young generation, i.e., peers, as the young individuals, specifically the students of universities, may affect each other. In addition, future research should take into account moderating and mediating factors to reinforce the associations in the model of study.