Financial literacy or investment experience: which is more influential in cryptocurrency investment?

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Haidong Zhao ◽  
Lini Zhang
Keyword(s):  
Financial Literacy ◽  
Model Comparison ◽  
The United States ◽  
Mediating Effect ◽  
Individual Investors ◽  
Investment Behavior ◽  
Content Type ◽  
Asset Holding ◽  
Investment Experience ◽  
Subjective Financial Knowledge

PurposeThe purpose of this study was to investigate how financial literacy and investment experience impact cryptocurrency investment behavior and explore which factor is more influential in cryptocurrency investment.Design/methodology/approachUsing a sample of US individual investors from the 2018 National Financial Capability Study Investor Survey, a three-step hierarchical logistic regression was conducted following a model-comparison approach. In addition, a mediation analysis was conducted using the Karlson−Holm−Breen (KHB) method to further explore the mediating effect of investment experience between financial literacy and cryptocurrency investment.FindingsThis study found that while both financial literacy and investment experience were positively associated with investing in cryptocurrencies, investment experience was more influential in cryptocurrency investment. The findings also demonstrated that investment experience, especially risky asset holding, had a significant mediating effect between subjective financial knowledge and cryptocurrency investment behavior.Practical implicationsThe findings of this study offer insight to researchers by providing a deeper understanding of the determinants of cryptocurrency investment in the United States. This study also provides detailed implications for financial institutions, financial professionals and policymakers to guide rational cryptocurrency investment behavior.Originality/valueThis study is one of the initial attempts to explore the determinant factors in cryptocurrency investment, an area that has rarely been studied in the literature.

How financial literacy and demographic variables relate to behavioral biases

2019 ◽  
Vol 45 (1) ◽  
pp. 124-146 ◽  
Author(s):  
H. Kent Baker ◽  
Satish Kumar ◽  
Nisha Goyal ◽  
Vidhu Gaur
Keyword(s):  
Financial Literacy ◽  
Academic Research ◽  
Mental Accounting ◽  
Demographic Variables ◽  
Disposition Effect ◽  
Individual Investors ◽  
Extensive Literature ◽  
Content Type ◽  
Behavioral Biases ◽  
Investment Experience

PurposeThe purpose of this paper is to examine how financial literacy and demographic variables (gender, age, income level, education, occupation, marital status and investment experience) related to behavioral biases.Design/methodology/approachThe study uses one-way analysis of variance (ANOVA), factor analysis and multiple regression analysis to examine survey data from more than 500 individual investors in India.FindingsThe results reveal the presence of different behavioral biases including overconfidence and self-attribution, the disposition effect, anchoring bias, representativeness, mental accounting, emotional biases and herding among Indian investors. Hence, the findings support the view that individual investors do not always act rationally. The results also show that financial literacy has a negative association with the disposition effect and herding bias, a positive relation with mental accounting bias, but no significant relation with overconfidence and emotional biases. Age, occupation and investment experience are the most important demographic variables that relate to the behavioral biases of individual investors in the sample. Regarding gender, males are more overconfident than are females about their knowledge of the stock market.Research limitations/implicationsThe study does not test for causality, only association between the variables. Thus, the findings in this study should not be interpreted as suggesting causality. The study may have implications for financial educators in promoting the financial awareness programs for individuals. Financial advisors can potentially become more effective by understanding their clients’ decision-making processes.Originality/valueDespite an extensive literature on behavioral finance, limited academic research attempts to unravel the relation of how financial literacy and demographic variates relate to behavioral biases. This study contributes to this literature by trying to fill this gap.

Investment environment, stock market perception and stock investments after stock market crash

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Mohammad Tariqul Islam Khan ◽  
Siow-Hooi Tan ◽  
Lee-Lee Chong ◽  
Gerald Guan Gan Goh
Keyword(s):  
Stock Market ◽  
Market Performance ◽  
Mediating Effect ◽  
Individual Investors ◽  
Investment Environment ◽  
Stock Market Crash ◽  
Content Type ◽  
Stock Market Performance ◽  
Market Perception ◽  
Stock Investments

PurposeThis study examines how the importance of external investment environment factors affect stock market perception, and how stock market perception affects stock investments after stock market crash witnessed by individual investors in one of the emerging stock markets.Design/methodology/approachA cross-sectional survey was administrated among 223 individual investors who experienced stock market crash in 2010–2011 in Bangladesh, and the proposed model was tested by the partial least squares-structural equation modeling PLS-SEM model.FindingsFindings show that the importance of Bangladesh's stock market performance, government policy, economic issues and neighboring country's stock market performance has effects on investors' stock market perception. This perception, in turn, decreases monthly stock trading and short-term investment horizon. The findings further show the mediating effect of stock market perception.Practical implicationsInvestors need to carefully consider the external investment environment when they form their stock market perception, as this perception drives stock investments. Analogously, regulators should ensure releasing timely and updated statistics on external investment factors.Originality/valueAddressing those investors who encountered stock market crash, a set of external investment environment issues, stock market perception and stock investments are new in the literature.

Subjective financial knowledge, prudent behaviour and income

2019 ◽  
Vol 37 (4) ◽  
pp. 934-950 ◽  
Author(s):  
Leonore Riitsalu ◽  
Rein Murakas
Keyword(s):  
Financial Literacy ◽  
Financial Education ◽  
Well Being ◽  
Financial Knowledge ◽  
Future Research ◽  
Objective Knowledge ◽  
Content Type ◽  
Subjective Knowledge ◽  
Subjective Financial Knowledge ◽  
Behaviour Score

Purpose The purpose of this paper is to study how subjective and objective knowledge of finance, behaviour in managing personal finances and socio-economic status affect financial well-being. Design/methodology/approach The financial well-being score is constructed in quantitative financial literacy survey data from Estonia as the arithmetic mean of four statements on a five-point scale. Four hypotheses are tested in multiple regression analysis. Findings Subjective knowledge has a stronger relation with financial well-being than objective knowledge. Financial behaviour score and income level correlate with financial well-being. Research limitations/implications The paper contributes to literature on financial literacy, subjective financial knowledge and financial well-being. In future research, psychological factors and future orientated financial well-being should be included, and their relationship to subjective well-being could be analysed further. Practical implications The results highlight the importance of subjective knowledge and sound behaviour for improving financial well-being. Providers of financial services should address these more in the design of their services and communication. Social implications Policymakers developing national strategies for financial education need to address subjective financial knowledge for increasing financial well-being in society. Originality/value Knowledge, behaviour and subjective knowledge have not been used simultaneously in the analysis of financial well-being in Europe before.

scholarly journals Crowdfunding REITs: a new asset class for the real estate industry?

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Lucia Gibilaro ◽  
Gianluca Mattarocci
Keyword(s):  
Real Estate ◽  
The United States ◽  
Individual Investors ◽  
Diversification Strategy ◽  
Content Type ◽  
The Real ◽  
The Real Estate ◽  
Real Estate Sector ◽  
Real Estate Investments ◽  
Asset Class

PurposeThe paper aims to study the performance of crowdfunding REITs with respect to traditional REITs in order to evaluate the differences in the risk–return profile and their usefulness for a diversification strategy within the indirect real estate investments.Design/methodology/approachThe paper considers the crowdfunding REITs introduced after the JOBS act in the United States and evaluates their performance and risk during the time period 2016–2018. Performance achieved by crowdfunding REITs is compared with other types of REITs in order to evaluate their usefulness for constructing an optimal portfolio strategy based on a standard mean variance approach.FindingsResults show that the performance of crowdfunding REITs is more stable over time with respect to other REITs and the lack of correlation with traditional REITs may be exploited for constructing a more efficient diversified portfolio of indirect real estate investments.Practical implicationsCrowdfunding REITs have different performance with respect to standard REITs and, especially individual investors, may benefit from including this new investment opportunity in their portfolio.Originality/valueThe paper is the first study on the performance of the crowdfunding REITs that is evaluating their usefulness for a diversification strategy within the real estate sector.

Linking secure attachment to commitment: trust in supervisors

2016 ◽  
Vol 37 (3) ◽  
pp. 387-402 ◽  
Author(s):  
Selin Metin Camgöz ◽  
Pinar Bayhan Karapinar
Keyword(s):  
Attachment Style ◽  
Structural Equation ◽  
Model Comparison ◽  
Mediating Effect ◽  
Equation Modeling ◽  
Secure Attachment ◽  
Multiple Mediation ◽  
Cognitive Trust ◽  
Content Type ◽  
The Relationship

Purpose – The purpose of this paper is to examine the relationship between a secure attachment style and affective commitment (AC) through the mediating roles of affective and cognitive trust in a direct supervisor. Design/methodology/approach – The study was conducted using the questionnaire answers of 357 private sector employees in various occupations. The statistical analysis was based on structural equation modeling. A multiple mediation model enabled us to investigate the specific indirect effects of each mediator. Findings – Results based on a model comparison showed that the employees’ affective trust in their supervisor fully mediated the relationship between a secure attachment style and AC. However, cognitive trust had no significant mediating effect on relationships between a secure attachment style and AC. Practical implications – Trust in supervisors should be monitored and supported during developmental interventions. Understanding the power of affective and cognitive trust in predicting attitudes can help shape more effective interventions to influence positive work attitudes, including AC. Originality/value – The study sheds new light on the literature by linking individual attachment to organizational attachment as the mediating role of two forms of trust in a supervisor.

Past behaviour, financial literacy and investment decision-making process of individual investors

2020 ◽  
Vol 15 (6) ◽  
pp. 1243-1263 ◽  
Author(s):  
Rajdeep Kumar Raut
Keyword(s):  
Decision Making ◽  
Financial Literacy ◽  
Structural Equation ◽  
Investment Decision ◽  
Individual Investors ◽  
Successful Implementation ◽  
Snowball Sampling ◽  
Content Type ◽  
Investment Decision Making ◽  
External Variables

PurposeThis study aims to explore the importance of past behaviour and financial literacy in the investment decision-making of individual investors and examines the validity of the theory of planned behaviour in this context.Design/methodology/approachThe study used a self-administered questionnaire and adopted the convenience sampling technique followed by a snowball sampling method for the survey to collect data from the individual investors covering the four distinct states of India. Collected data were analysed on AMOS 20.0 using two-step structural equation modelling (SEM).FindingsResults indicated a significant effect of all the predictive variables. Past behaviour showed no significant direct impact on investor's intention; however, it had an indirect significant relationship while mediated by the attitude of investors. The multiple squared correlation (R2) showed that the final model could explain 36% of the variance in investors' intention towards stock investment which signified a successful implementation of the TPB model along with external variables added to it. Moreover, Indian investors were found to be highly influenced, primarily, by social pressure which could be curbed through financial literacy.Practical implicationsA significant importance of subjective norms was found on stock market participation which could be a strategic theme for the government and the policymakers to educate investors through their opinion leaders for increasing their participation. Moreover, by doing so investors could control their behaviour and take rational decisions.Originality/valueThis study extended the understandings of investor's decision-making behaviour using TPB by incorporating the two external variables viz., Financial literacy and past behaviour. The addition of past behaviour is perhaps the novelty of this article since such examination has not been conducted empirically especially in the case of developing countries like India.

Analyzing the relationship between financial literacy and financial inclusion by microfinance banks in developing countries: social network theoretical approach

2020 ◽  
Vol 40 (11/12) ◽  
pp. 1257-1277
Author(s):  
George Okello Candiya Bongomin ◽  
Joseph Mpeera Ntayi ◽  
Charles Akol Malinga
Keyword(s):  
Developing Countries ◽  
Social Network ◽  
Research Design ◽  
Financial Literacy ◽  
Financial Inclusion ◽  
Mediating Effect ◽  
Cross Sectional ◽  
Content Type ◽  
The Poor ◽  
The Relationship

PurposeThe main purpose of this study is to establish the mediating effect of social network in the relationship between financial literacy and financial inclusion of the poor by microfinance banks in developing countries.Design/methodology/approachThe study adopted a cross-sectional research design and data were collected from the poor who resides in rural Uganda. Structural equation modelling (SEM) through analysis of moment structures (AMOS) was used to analyze the data. Bootstrap approach with 5,000 samples was run to establish the mediating effect of social network in the relationship between financial literacy and financial inclusion of the poor by microfinance banks in developing countries.FindingsThe results showed that social network significantly and positively mediate the relationship between financial literacy and financial inclusion of the poor by microfinance banks in developing countries. In addition, financial literacy also has a direct significant and positive effect on financial inclusion. Overall, the findings suggest that the presence of social network fully mediate the effect of financial literacy on financial inclusion of the poor by microfinance banks in developing countries.Research limitations/implicationsThis study adopted a cross-sectional research design and data were collected using a semi-structured questionnaire. Future studies could adopt longitudinal research design to establish the dynamic characteristics of the samples under study over time. Besides, this study collected data from only poor households who were clients of microfinance banks located in rural Uganda. It ignored the other section of the population who were not the poor. Therefore, future studies could use the other section of the population who are clients of commercial banks.Practical implicationsThe advocates of financial literacy and managers of microfinance banks in developing countries should ensure using existing local structures such as community and village associations to conduct financial literacy training. The village associations help in mobilizing members who are close-knit based on the existing societal ties that can be used as a channel for disseminating vital financial literacy information. Indeed, financial literacy workshops, seminars, and business clinics can be easily conducted to individuals who are members of the village associations.Originality/valueThis paper integrates social network theory in the relationship between financial literacy and financial inclusion of the poor by microfinance banks in developing countries. Social network acts as a conduit through which financial knowledge and skills flow to increase the scope of financial inclusion of the poor in developing countries.

Financial self-efficacy: a mediator in advancing financial inclusion

2017 ◽  
Vol 36 (2) ◽  
pp. 128-149 ◽  
Author(s):  
Rachel Mindra ◽  
Musa Moya
Keyword(s):  
Financial Literacy ◽  
Financial Services ◽  
Self Efficacy ◽  
Structural Equation ◽  
Structural Equation Models ◽  
Financial Inclusion ◽  
Mediating Effect ◽  
Mediation Effects ◽  
Content Type ◽  
The Relationship

Purpose The purpose of this paper is to examine the mediating effect of financial self-efficacy (FSE) on the relationship between financial attitude, financial literacy and financial inclusion (FI) among individuals in Uganda. Design/methodology/approach Using a quantitative approach and cross-sectional research design, a sample of 400 individuals from urban Central and rural Northern Uganda was drawn. Using SPSS and AMOS™ 21, structural equation models and bootstrapping methods were used to establish the hypothesized relationships and mediation effects between financial attitude, financial literacy and FI. Findings The results suggested FSE as a mediator of the relationship between financial attitude, financial literacy and FI. Further, there was a significant and insignificant relationship between financial literacy, financial attitude and FI, respectively. Research limitations/implications The study was assessed using both potential and actual consumers of financial services collectively. However if separately assessed, possibly there would be a variation in perceptions or behavioural responses towards FI. Practical implications There is a need to develop and sustain high levels of financial confidence among individuals to enable them use formal financial services. Social implications Possession of financial knowledge, skills, an evaluative judgement with high levels of financial confidence enable individuals make financial decisions that improve their integration into the formal financial system and improved welfare. Originality/value The results contribute towards the limited empirical and theoretical evidence regarding the mediating role of FSE in explaining the financial behaviour.

Evaluating the effects of sociodemographic characteristics and financial education on saving behavior

2020 ◽  
Vol 40 (11/12) ◽  
pp. 1423-1438 ◽  
Author(s):  
Mouna Amari ◽  
Bassem Salhi ◽  
Anis Jarboui
Keyword(s):  
Risk Aversion ◽  
Financial Literacy ◽  
Financial Education ◽  
Well Being ◽  
Mediating Effect ◽  
Content Type ◽  
Saving Behavior ◽  
Literacy Level ◽  
Education Training ◽  
The Impact

PurposeThe objective of this study is to explore the effects of financial literacy level and risk aversion on the saving behavior. The literature review showed dialectical results. Therefore, this study attempts to clarify the debatable of these results by studying the mediating effect of risk aversion on the relationships between demographics determinants and saving behavior moderated by the effect of the financial literacy level.Design/methodology/approachThe data were collected from the University of Normandy; the study sample included 516 respondents representing different segments of French households. The structural equation analysis was utilized to control the impact of financial literacy as a moderate variable and the risk aversion as a mediator variable among the link between sociodemographic factors and saving behavior.FindingsThe results demonstrated that there were significant effects of demographics factors on risk aversion. Moreover, financial literacy moderates the relationships between risk aversion and saving behavior.Research limitations/implicationsThe major limitation of this research is the small size of the study sample. This paper is restricted to French households. Future financial education training should cover the European context.Practical implicationsThis study provides further evidence that financial literacy should be considered an important factor for improving household well-being. The paper encourages governments and financial institutions to create a national financial education program.Originality/valueThis paper is the first attempt to employ a sample of low-income households after financial education training in the French context.

Individual investors’ intention towards SRI in India: an implementation of the theory of reasoned action

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Rajdeep Kumar Raut ◽  
Rohit Kumar ◽  
Niladri Das
Keyword(s):  
Financial Performance ◽  
Financial Literacy ◽  
Theory Of Reasoned Action ◽  
Reasoned Action ◽  
Environmental Concern ◽  
Subjective Norms ◽  
Individual Investors ◽  
Moral Norms ◽  
Content Type ◽  
The Government

Purpose This study aims to explore and comprehend the reasons behind individual investors’ intention towards socially responsible investment (SRI) in the Indian stock market along with examining the validity of the theory of reasoned action (TRA) model to predict such phenomenon in the Indian context. Design/methodology/approach The TRA has been used as an underlying framework and has been extended by adding four variables, namely, moral norms, environmental concern, financial literacy and financial performance. The study used a self-administered questionnaire and adopted a convenience sampling method for a survey to collect the data from the individual investors from the capital cities of three states of India. Further, the collected data have been analysed using two-step structural equation modelling. Findings Results of this study indicate a significant impact of attitude, subjective norms, moral norms, financial literacy and financial performance on investors’ intention towards SRI; however, no significant relation was found between environmental concern and investors’ SRI intention. The multiple squared correlation (R2) shows that the final model could explain 71% of the variance in investors’ intention towards SRI, which signifies a successful implementation of TRA model along with new additions to predict investors’ decision-making behaviour for SRI. Moreover, investors are found to be highly concerned primarily about their financial goals and then for their personal obligation towards society as far as SRI is concerned. Practical implications This study reports significant and prominent importance of subjective norms in SRI which could be a strategic theme for the government and the policymakers to influence investors through their opinion leaders to promote SRI. The government should also increase its efforts to facilitate financial literacy among citizens. Originality/value Using the TRA model and four variables, namely, moral norms, environmental concern, financial literacy and financial performance addition to its original variables, this study extends the understandings of SRI which is perhaps the novelty of this paper because such examination of SRI has not been conducted, especially in the case of developing countries such as India.

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