scholarly journals Wealth, Financial Literacy and Behavioral Biases in Japan: the Effects of Various Types of Financial Literacy

2022 ◽  
pp. 101190
Author(s):  
Shizuka Sekita ◽  
Vikas Kakkar ◽  
Masao Ogaki
Keyword(s):  
Financial Literacy ◽  
Behavioral Biases

scholarly journals Financial Homo Ignorans: measuring vulnerability to behavioral biases in household finance

2020 ◽  
Author(s):  
Kinga Barrafrem ◽  
Daniel Västfjäll ◽  
Gustav Tinghög
Keyword(s):  
Financial Literacy ◽  
Household Finance ◽  
Well Being ◽  
Financial Behavior ◽  
Policy Makers ◽  
Total N ◽  
Behavioral Biases ◽  
Finance Management ◽  
Item Questionnaire ◽  
Application Potential

Understanding systematic differences in sound financial behavior between individuals is a key area for public policy and the possibility to tailor interventions to promote financial well-being. In this paper we develop and validate a concise 12 item questionnaire measuring individual’s vulnerability to behavioral biases in household finance – the Financial Homo Ignorans (FHI) Scale. We conduct two studies with general population samples (total N=2508) and show that the FHI scale can predict behavior in financial tasks such as consumer purchases, loan choices, or investment decisions, also when controlling for demographics, financial literacy and other related constructs. In addition, we show that consumer heterogeneity as assessed by the FHI scale explains the variation in household finance management and financial well-being. The FHI scale has application potential as it can be used by researchers, policy makers, and financial institutions to study the psychological underpinnings of financial behavior and design interventions by targeting individuals who are particularly vulnerable.

scholarly journals Impact of Behavioral Biases on Investment Performance in Pakistan: The Moderating Role of Financial Literacy

2020 ◽  
Vol 6 (4) ◽  
pp. 1199-1205
Author(s):  
Amir Rafique ◽  
Muhammad Umer Quddoos ◽  
Usama Kalim ◽  
Muhammad Ramzan Sheikh
Keyword(s):  
Financial Literacy ◽  
Stock Exchange ◽  
Investment Decisions ◽  
Equation Modeling ◽  
Investment Performance ◽  
Policy Makers ◽  
Behavioral Biases ◽  
Structured Equation Modeling ◽  
Moderating Role

This study aims at understanding the relationships of certain behavioral biases with the investment performance, and identifies the moderating role of financial literacy upon these hypothesized relationships. Data is collected through questionnaire from the investors trading at Pakistan Stock Exchange (PSX). Structured Equation Modeling (SEM) is used to analyze the data with the results that only anchoring and overconfidence biases have significant effects on investment performance. The results also show that presence of financial literacy does not play any role in improving the performance of investors. Majorly, findings of current study contribute by testing the moderating role of financial literacy between the behavioral biases and the outcome of investment decisions and thus expected to be useful for investors and policy makers.  

scholarly journals The effect of financial literacy on behavioral biases of individual investors in the Egyptian stock exchange

2021 ◽  
Vol 5 (2, special issue) ◽  
pp. 120-134
Author(s):  
Amr Youssef ◽  
Passent Tantawi ◽  
Mohamed Ragheb ◽  
Mohammad Saeed
Keyword(s):  
Information Processing ◽  
Financial Literacy ◽  
Stock Exchange ◽  
Individual Investors ◽  
General View ◽  
Behavioral Biases ◽  
Information Processing Biases ◽  
Belief Perseverance ◽  
The Impact ◽  
Egyptian Stock Exchange

The purpose of this paper is to examine how the dimensions of financial literacy could affect the behavioral biases of individual investors in the Egyptian stock exchange. The study examines the data collected from 403 individual investors in Egypt. The findings revealed the presence of some kinds of behavioral biases among individual investors in the Egyptian stock exchange, which could be categorized into three main categories: belief perseverance biases, information processing biases, and emotional biases (Pompian, 2012). This supports the view that individual investors do not necessarily act rationally. The findings also support the general view that financial literacy has a negative effect on behavioral biases; however, the effect differs between the categories of the behavioral biases, with the most effect on information processing biases, moderate effect on belief perseverance biases, and low effect on emotional biases. Also, this study indicated that the impact of financial literacy on behavioral biases is greater on females than males (Baker, Kumar, Goyal, & Gaur, 2019). Financial intermediaries and consultants can possibly become more effective by understanding the decision-making processes of individual investors. This study adds to the limited academic research that attempted to tackle the impact of financial literacy on the categories of behavioral biases

Financial Literacy And Behavioural Skills: The Influence Of Financial Literacy Level On Behavioural Skills

2017 ◽  
Vol 1 (2) ◽  
pp. 366
Author(s):  
Nesleha Josef ◽  
Jancurova Vera
Keyword(s):  
Behavioral Finance ◽  
Financial Literacy ◽  
Primary Schools ◽  
Demographic Data ◽  
Objective Evaluation ◽  
Data File ◽  
The United States ◽  
Behavioral Biases ◽  
Gender Education ◽  
Specialized Institutions

<p>Financial literacy and behavioral finance have become a part of education not only in the United States, but also in the whole of Europe. The process of education, in terms of financial literacy, starts at primary schools where children start to be exposed to financial literacy. It is followed by additional stages of education system. Moreover, this is completed by range of other possibilities how to become familiar with this type of knowledge, in the way of various programs, usually conducted by governments and other specialized institutions. Especially, in terms of universities behavioral finance start to play important role as well.</p><p>Based on the previous assumptions, financial literacy needs to be tested, measured and evaluated, notably the level of students studying Economics, since their participation in economic world might affect the future of our society and welfare.</p><p>The goal of this article is to verify whether there are some gaps among students and find out what are predictors standing behind various level of financial literacy. Consequently, additional target is to detect how financial literacy influences the sensitivity to behavioral biases and heuristics. This goal is reached by doing own research, which is based on an electronic questionnaire. The questionnaire consists of three main parts. In the first part, respondents provide us with their demographic data, such as age, gender, education and other. The second one focuses on objective evaluation of respondent´s knowledge of financial literacy. The last part examines behavioral finance, especially respondent´s reaction to behavioral biases.</p>The methods, used for the questionnaire evaluation, are descriptive statistics, enabling us to make a first assessment of the data file, and two-sample t-test, enabling compare different groups or samples. It also provides a chance to verify whether suffering from a particular bias corresponds with higher of lower level of financial literacy.

scholarly journals Pengaruh Karakteristik Demografis Dan Literasi Keuangan Terhadap Keputusan Investasi Melalui Behavioral Biases

2021 ◽  
Vol 3 (1) ◽  
pp. 214
Author(s):  
Feshia Natalia ◽  
Hendra Wiyanto
Keyword(s):  
Financial Literacy ◽  
Investment Decisions ◽  
Sampling Technique ◽  
Demographic Characteristics ◽  
Partial Least Square ◽  
Least Square ◽  
Purposive Sampling ◽  
Behavioral Biases ◽  
Descriptive Research ◽  
Analysis Technique

This study aims to determine the influence of demographic characteristics and financial literacy on behavioral biases and investment decisions of stock investors, as well as to determine the influence of behavioral biases on investment decisions and the role of behavioral biases in mediating demographic characteristics and financial literacy on investment decisions of stock investors. The research design used in this research is descriptive research with a quantitative approach. This study uses a nonprobability sampling method with a purposive sampling technique. The data collection method used a questionnaire and obtained a sample of 103 respondents. The data analysis technique in this research is Partial Least Square, using SmartPLS software. The results showed that demographic characteristics, financial literacy and behavioral biases can influence investment decisions in stock investors. Behavioral biases cannot be influenced by demographic characteristics, whereas financial literacy can influence behavioral biases in investors. Besides, behavioral biases cannot mediate the influence of demographic characteristics on investment decisions indirectly, but behavioral biases can partially mediate the influence of financial literacy on investment decisions.Penelitian ini bertujuan untuk mengetahui pengaruh karakteristik demografis dan literasi keuangan terhadap behavioral biases dan keputusan investasi pada investor saham, serta mengetahui pengaruh behavioral biases terhadap keputusan investasi dan peran behavioral biases dalam memediasi karakteristik demografis dan literasi keuangan terhadap keputusan investasi investor saham. Desain penelitian yang digunakan dalam penelitian ini adalah penelitian deskriptif dengan pendekatan kuantitatif. Teknik pengambilan sampel menggunakan metode nonprobability sampling yaitu purposive sampling. Metode pengumpulan data menggunakan kuesioner dan diperoleh sampel berjumlah 103 responden. Teknik analisis data menggunakan Partial Least Square, dengan sotfware SmartPLS. Hasil penelitian menunjukkan bahwa karakteristik demografis, literasi keuangan dan behavioral biases dapat mempengaruhi keputusan investasi pada investor saham. Behavioral biases tidak dapat dipengaruhi oleh karakterstik demografis, sedangkan literasi keuangan dapat mempengaruhi behavioral biases pada investor. Selain itu, behavioral biases tidak dapat memediasi pengaruh karakteristik demografis terhadap keputusan investasi secara tidak langsung, sedangkan behavioral biases dapat memediasi pengaruh literasi keuangan terhadap keputusan investasi secara sebagian (partial mediation).

scholarly journals An empirical study on how financial literacy contributes to preparation for retirement

2020 ◽  
pp. 1-23
Author(s):  
Tsung-ming Yeh
Keyword(s):  
Decision Making ◽  
Empirical Study ◽  
Empirical Evidence ◽  
Information Search ◽  
Financial Literacy ◽  
Decision Making Process ◽  
Process Information ◽  
Behavioral Biases ◽  
Positive Effects ◽  
Financial Products

Abstract This study provides empirical evidence on the mechanisms through which financial literacy may be associated with saving for retirement, in the three phases of the decision-making process – information perception, information search and evaluation, and decision-making and implementation. The results indicate that financial literacy has significantly positive effects on one's awareness of post-retirement financial needs, comparing alternatives when purchasing financial products, displaying fewer present-time bias, and planning for and setting aside funds for retirement. Financial literacy not only directly contributes to planning for the future, but also indirectly via a reduction in behavioral biases.

scholarly journals The Behavioral Role of Digital Economy Adaptation in Sustainable Financial Literacy and Financial Inclusion

2021 ◽  
Vol 12 ◽  
Author(s):  
Siming Liu ◽  
Leifu Gao ◽  
Khalid Latif ◽  
Ayesha Anees Dar ◽  
Muhammad Zia-UR-Rehman ◽  
...  
Keyword(s):  
Loss Aversion ◽  
Financial Literacy ◽  
Well Being ◽  
Digital Economy ◽  
Moderating Effect ◽  
Financial Inclusion ◽  
Self Control ◽  
Behavioral Biases ◽  
The Impact ◽  
Behavioral Phenomenon

The basic aim of this research was to investigate the impact of the behavioral biases on financial inclusion in Pakistan while considering the moderating effect of financial literacy in this relation, in the context of behavioral perspective. This study focused on the significant behavioral phenomenon, including self-control, optimism, herding, and loss aversion with a perspective of the digital economy. To test the proposed hypothesis, the primary data collection method was used. A structured questionnaire was designed to collect data from 102 individual households through the convenience sampling technique. SmartPLS was used to analyze collected data. This study found the negative impact of self-control, optimism, and herding on financial inclusion. In contrast, loss aversion contributes to the uplift of financial inclusion in Pakistan. Similarly, financial literacy proved to have a decreasing effect on financial inclusion because of religious concerns. The moderation effect of financial literacy was also significantly positive except for loss aversion. The behavioral phenomenon proved to have a significant impact on financial inclusion. This research shows that individual households who do not use developed technological services and products from formal financial inclusion can overcome the behavioral biases that hinder them from making informed financial decisions. This research work will significantly help households use financial services to improve their standard of living and overall long-term financial well-being. This research is essential because many households are not using bank services and have low financial knowledge in Pakistan. The key contribution of this research study is that it found the relation between behavioral factors and financial inclusion. Financial literacy also has a moderating effect on their relations.

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