Exploring the relationship between investment choices, cognitive abilities risk attitudes and financial literacy

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Muhammad Mushafiq ◽  
Shamsa Khalid ◽  
Muhammad Khalid Sohail ◽  
Tayyebah Sehar
Keyword(s):  
Risk Aversion ◽  
Financial Literacy ◽  
Cognitive Abilities ◽  
Risk Attitudes ◽  
Positive Contribution ◽  
Content Type ◽  
Risky Investment ◽  
Investment Intentions ◽  
The Relationship ◽  
Investment Choices

PurposeThe main purpose of this study is to investigate the investment choices' relationship with cognitive abilities, risk aversion, risky investment intentions, subjective financial literacy and objective financial literacy.Design/methodology/approachTo examine the relationship, two investment choices were given to 256 subjects from Pakistan. Questionnaire had total 20 questions for measuring five variables. To review this nexus, discriminant analysis was used as to explore the depth of the nexus that is the ability of the variables to predict the investment choices.FindingsThis study establishes the findings that Investment choices are guided by risk aversion, risky investment intentions, financial literacy (subjective and objective) and cognitive abilities. The risk aversion has negative relation to investment choices and other variables depict positive relationship to with investment choices.Practical implicationsThis study provides a new and useful understanding into the existing literature on investment choices. The results are significant as the cognitive abilities show a positive contribution to the investment choices. This is point of significance as the portfolio managers and advisors would get help in regards of advising investments as they are aware what factors impact the investment choices.Originality/valueThis study is novel in its nature to evaluate investment choices using the cognitive ability alongside risk attitudes and financial literacy.

Relationship between risk aversion, risky investment intention, investment choices

Kybernetes ◽  
2020 ◽  
Vol 49 (11) ◽  
pp. 2651-2682
Author(s):  
Selim Aren ◽  
Hatice Nayman Hamamci
Keyword(s):  
Risk Aversion ◽  
Personality Traits ◽  
Financial Literacy ◽  
Big Five Personality ◽  
Content Type ◽  
Face To Face ◽  
Bank Deposits ◽  
Risky Investment ◽  
Survey Instruments ◽  
Investment Choices

Purpose This paper aims to examine the effects of subjective and financial literacy, big five personality traits and emotions (fear, anger, hope and sadness) on risk aversion, risky investment intention and investment choices were investigated. Interactions of these three variables (risk aversion, risky investment intention and investment choices) were also examined. Design/methodology/approach For this purpose, in January-February 2019, collected data on 446 subjects from Turkey using the internet (341) and face-to-face (105) survey instruments. The authors exploited IBM SPSS Statistics for analysis. ANOVA, t-test and discriminant analysis were performed. Findings As a result of the analyzes, two personality traits (neuroticism and openness) and two emotions (fear and sadness) were determined as predictors of risk aversion. For risky investment intention, risk aversion, two personality traits (neuroticism and openness) and one of the same and other one different two emotions (fear and anger) were found. Originality/value Investment choices can be estimated by objective financial literature, risk aversion and risky investment intention. In addition, individuals’ risk averse or risk taking characteristics differ according to their level of sadness with agreeableness, conscientiousness and neuroticism personality traits. Similarly, have a risky investment intention or have not risky investment intention also differs according to sadness emotions with conscientiousness and openness. Finally, the choice of stocks or bank deposits varies according to subjective financial literacy and extraversion personality trait.

The effect of individual cultural values and phantasy on risky investment intention

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Selim Aren ◽  
Hatice Nayman Hamamci
Keyword(s):  
Cultural Values ◽  
Power Distance ◽  
Uncertainty Avoidance ◽  
Content Type ◽  
Unconscious Processes ◽  
Risky Investment ◽  
Investment Intentions ◽  
The Impact ◽  
The Relationship

PurposeThis study aims to examine the impact of conscious and unconscious processes on risky investment intention. In this framework, the effect of individual cultural values and phantasy on risky investment intentions was investigated. In addition, the mediating role of phantasy in the relationship between individual cultural values and risky investment intentions was also analyzed.Design/methodology/approachData were collected between May 14, 2020 and June 01, 2020, when our graduate students voluntarily shared the online survey link on their social networks. In this way, 1,934 people in total answered the questionnaire. To test the study model, structural equation modeling (SEM) was performed using the AMOS program. In addition, ANOVA and independent sample t-test analyses were conducted using the SPSS program to analyze whether individual cultural values and risky investment intent differ according to demographic variables.FindingsAccording to the analysis results, power distance, collectivism, masculinity and long-term orientation are seen as antecedents of phantasy. While a positive relationship was found between power distance, collectivism and risky investment intention, a negative relationship was found between uncertainty avoidance and risky investment intention. Statistical findings regarding the mediating effect of phantasy on the relationship between individual cultural values and risky investment intentions were also determined. In addition to these, the differences in individual cultural values and risky investment intentions according to age, education level, sex and marital status were investigated. Individuals with the highest uncertainty avoidance level were in the 41–50 age group. Individuals with the highest long-term orientation level were individuals aged 41 and over. Individuals with the lowest risky investment intentions were in the +51 age group. Collectivism and power distance did not differ according to age. There were no differences in the relevant variables according to the level of education. Males have higher levels of risky investment intention, power distance, masculinity and collectivism than females, and married individuals have higher levels of uncertainty avoidance, masculinity and collectivism than singles.Originality/valueThis study is the first to investigate the impact of conscious and unconscious processes on risky investment intentions together. On the other hand, the number of studies empirically investigating the relationship between phantasy and risky investment intention is quite limited, and the authors have also provided the findings for the existence of a relationship between these two variables.

Institutional framing and financial inclusion

2017 ◽  
Vol 44 (12) ◽  
pp. 1727-1744 ◽  
Author(s):  
George Okello Candiya Bongomin ◽  
Joseph Mpeera Ntayi ◽  
John C. Munene
Keyword(s):  
Financial Literacy ◽  
Cognitive Abilities ◽  
Financial Inclusion ◽  
Mediating Effect ◽  
Literacy Programs ◽  
Research Approach ◽  
Cross Sectional ◽  
Content Type ◽  
Poor Households ◽  
The Relationship

Purpose The purpose of this paper is to establish the mediating effect of financial literacy in the relationship between institutional framing and financial inclusion among poor households in Uganda with a specific focus on Mokono district. Design/methodology/approach The study adopted a cross-sectional design. Data were analyzed using structural equation modeling (SEM), which adopted Analysis of Moment Structures to test for mediating effect of financial literacy in the relationship between institutional framing and financial inclusion. Findings The results revealed that financial literacy had a partial mediating effect in the relationship between institutional framing and financial inclusion. Furthermore, the results indicated that while institutional framing has a direct effect on financial inclusion, it also exerts an indirect effect through financial literacy. This supports the argument that institutional framing that structure the way how poor households interpret, evaluate, comprehend and make sound financial decisions and choices, is enhanced by knowledge and skills acquired through financial literacy by poor households. Research limitations/implications This study has been limited by adopting only cross-sectional design and quantitative research approach, therefore ignoring longitudinal design and qualitative research approach. Besides, the study uses SEM bootstrap approach and ignores MedGraph method, which is also recommended for testing mediation. Practical implications Since the results suggest that institutional framing of poor households are partially enhanced by financial literacy to increase financial inclusion, policy makers, practitioners and managers of financial institutions should ensure extending financial literacy programs closer to the poor in order to expand the scope of financial inclusion beyond the current sphere. Indeed, financial literacy programs will boost cognitive abilities of poor households resulting into better financial decisions and choices and, hence increase in demand and consumption of financial services. Originality/value The study significantly generates empirical evidence by testing the mediating role of financial literacy in the relationship between institutional framing and financial inclusion using SEM bootstrap approach. The study portrays the influential partial effect of financial literacy in enhancing institutional frames of poor households in order to cause improvement in financial inclusion. Indeed, financial literacy programs that entail acquisition of financial knowledge and skills boost cognitive abilities of poor households to easily interpret, evaluate, comprehend meanings, and take correct decisions and actions on financial matters. The mediating effect of financial literacy in the relationship between institutional framing and financial inclusion seems to be lacking in literature and theory. Thus, the paper is the first to relate the influential partial effect of financial literacy in the relationship between institutional framing and financial inclusion among poor households, especially in a developing country context.

Moderation effect of pleasure seeking and loss aversion in the relationship between personality traits and risky investment intention

Kybernetes ◽  
2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Selim Aren ◽  
Hatice Nayman Hamamci ◽  
Safvan Özcan
Keyword(s):  
Personality Traits ◽  
Big Five ◽  
Loss Aversion ◽  
Online Survey ◽  
Big Five Personality Traits ◽  
Big Five Personality ◽  
Moderator Effect ◽  
Content Type ◽  
Risky Investment ◽  
Investment Intentions

Purpose The aim of this study, the moderating effect of pleasure-seeking and loss aversion, was investigated in relation to the big five personality traits with regard to risky investment intentions. Design/methodology/approach In the study, the data was obtained between January and November 2019 via an online survey with convenience sampling. The total number of subjects is 886. The authors used IBM SPSS Statistics for analysis. Exploratory factor analysis, correlation analysis, regression analysis and discriminant analysis were performed. Findings Significant relationships were found between five personality traits and risky investment intentions. In these relationships, the moderator effect of pleasure-seeking for extraversion, conscientiousness and neuroticism personality traits was also determined. Besides, investment preferences for choosing “unknown and new investment” against “known and experienced investment”, which is a typical feature of the balloon periods, were modeled with big five personality traits and motivation variables (pleasure-seeking and loss aversion) and the equation was formed. As a result, high accuracy classification success was obtained. Originality/value The study is unique owing to its findings. In addition, general risk aversion and risky investment intention were investigated simultaneously to explain the different findings in the literature regarding the attitude of big five personality traits to risk and personality traits that show consistent approach were identified.

Agentic work behaviour and thriving at work: role of decision making authority

2018 ◽  
Vol 25 (8) ◽  
pp. 3225-3237 ◽  
Author(s):  
Surendra Kumar Sia ◽  
Pravakar Duari
Keyword(s):  
Decision Making ◽  
Three Dimensions ◽  
Positive Contribution ◽  
Manufacturing Companies ◽  
Content Type ◽  
Independent Contribution ◽  
The Relationship ◽  
Task Focus ◽  
Thriving At Work

PurposeThe purpose of this paper is to examine the contribution of agentic work behaviour and decision-making authority (DMA) to thriving at work and, more importantly, the moderating role of DMA in the relationship between agentic behaviour and thriving.Design/methodology/approachThe study has been carried out upon a random sample of 330 employees below supervisory level from manufacturing companies located at Odisha (a state located at the eastern part of India). After verifying the significance of correlation among the study variables through Pearson’s product moment correlation, moderated regression analyses were carried out to examine the independent contribution of agentic work behaviour and DMA to thriving as well as the moderating contribution of DMA towards thriving.FindingsResults reveal that the three dimensions of agentic work behaviour, namely, task focus, exploration and heedful relation, have a direct positive contribution towards thriving at workplace. As far as the moderation is concerned, it is observed that the thriving level is higher for the employees having high DMA irrespective of the level of agentic work behaviour at each dimension.Research limitations/implicationsThe findings imply for designing interventions to enhance task focus, super-ordinate relationship and interest for learning. In addition, the organisations should provide autonomy to employees for decision making.Originality/valueThe study is first of its kind in the Indian context upon employee thriving. In this study, the authors have not only investigated the separate independent contribution of agentic behaviour and DMA, but also their interacting contribution to employee thriving.

Socioemotional wealth and human resource policies: effects on family firm performance

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Juan David Peláez-León ◽  
Gregorio Sánchez-Marín
Keyword(s):  
High Risk ◽  
Financial Performance ◽  
Human Resource ◽  
Family Firms ◽  
Equation Modeling ◽  
Positive Contribution ◽  
Socioemotional Wealth ◽  
Content Type ◽  
Firm Financial Performance ◽  
The Relationship

PurposeThis study analyses whether human resource management (HRM), through the use of four sets of high-performance work policies (HPWPs) (i.e. selection, training, motivation and opportunity policies), mediates the relationship between socioemotional wealth (SEW)—defined as a unique set of nonfinancial family goals—and firm financial performance when family firms face a high-risk context.Design/methodology/approachHypotheses were statistically tested using a structural equation modeling (SEM) methodology with a cross-sectional sample of 196 medium-sized and private family firms in a high-risk context in Spain.FindingsThe results indicate that the relationship between SEW and financial performance in family firms is fully mediated by the use of HPWPs, especially by training and motivation HR policies. The importance given to preserving SEW influences the use of four sets of HPWPs when family firms show clear evidence of being confronted by a financial decline (i.e. a high-risk context). However, to improve their financial results to avoid the firm's failure and thus the loss of their SEW, only those HR policies that focus on training and motivation made a significant and positive contribution to the firm financial performance.Originality/valueThis study contributes to the literature on family firms and HRM by adopting an alternative theoretical framework to understand how the importance of nonfinancial family goals may affect employee structures and management policies, thereby improving financial performance in family firms.

Evaluating the impact of hedonism on investment choices in India

2019 ◽  
Vol 45 (12) ◽  
pp. 1526-1541 ◽  
Author(s):  
Harish Kumar Singla ◽  
Amit Hiray
Keyword(s):  
Stock Market ◽  
Financial Literacy ◽  
Structural Equation ◽  
Measurement Model ◽  
Equation Model ◽  
Social Recognition ◽  
Fixed Income ◽  
Content Type ◽  
The Impact ◽  
Investment Choices

Purpose The purpose of this paper is to find the effect of the hedonism value on the investment preference in India. Design/methodology/approach Based on the literature review, a measurement model is developed to measure hedonism. Further, the effect of hedonism on investment choices of an individual and the impact of age, gender and income level on investment choices and on hedonism are also measured through a structural equation model (SEM). Findings The study finds that the measurement model is reliable, and all five items, that is an exciting life, happiness, pleasure, social recognition and a comfortable life, are an appropriate measure of hedonism. The study finds that hedonists prefer to invest in stock market-related instruments and real estate. The study also ascertains that age and income affect the hedonism value negatively. The findings also indicate that women prefer to invest in fixed income instruments and men prefer to invest in stock market-related instruments. As people grow in age, they prefer to invest in fixed-income instruments and gold as a hedge, thus avoiding risky investments. Research limitations/implications The study does not include education and financial literacy of individuals in the model, rather controls these factors by selecting a sample where the minimum educational qualification of the respondent is graduation. Practical implications It is assumed that the values that drive an individual have the potential to influence his/her investment choices. Therefore, the study advises the firms offering investment services to their clients to ensure that apart from studying the demographic and risk profile of individuals, they also assess their value system. This can help them target their customers more precisely and serve them better. Originality/value The study is perhaps the first attempt to find the effect of personal values (specifically hedonism) on investment choices made by individuals, through the development of an SEM.

Financial exclusion and financial capabilities in Canada

2016 ◽  
Vol 8 (2) ◽  
pp. 212-227 ◽  
Author(s):  
Laura Lamb
Keyword(s):  
Survey Data ◽  
Financial Literacy ◽  
Financial Services ◽  
Conclusive Evidence ◽  
Exploratory Research ◽  
Financial Capability ◽  
Content Type ◽  
Financial Exclusion ◽  
Canadian City ◽  
The Relationship

Purpose The financially excluded are often denied basic financial services from mainstream banking institutions, leading them to high-cost fringe finance institutions (FFIs) such as payday loan companies and pawnshops. While strategies to address financial exclusion often include financial capabilities education, there does not appear to be evidence suggesting such education is an appropriate solution. The purpose of this study is to explore the relationship between financial capability and financial exclusion with survey data collected from the Canadian city of Kamloops located in the southern interior of British Columbia. Design/methodology/approach This exploratory research addresses the objective with survey data collected on the banking habits and financial capability levels of fringe finance users in a Canadian city. Findings The results imply that fringe finance users do not have lower levels of financial capability than those who do not use fringe finance, when education and income are controlled. Research limitations/implications Limitations include the relatively small survey sample of 105 people in one urban center in Canada. Originality/value While financial literacy is acknowledged to be an important life skill for all members of society, there is no conclusive evidence suggesting it is a solution to financial exclusion. This is the first research to examine the relationship between financial exclusion and fringe finance use in Canada by collecting data on fringe finance users with face-to-face interviews.

The Determinants of Risk Aversion: The Role of Intergenerational Transmission

2013 ◽  
Vol 14 (2) ◽  
pp. 214-234 ◽  
Author(s):  
Maria De Paola
Keyword(s):  
Risk Aversion ◽  
Intergenerational Transmission ◽  
Individual Characteristics ◽  
Risk Attitudes ◽  
Risk Averse ◽  
The Public ◽  
Measures Of Risk ◽  
High Ability Students ◽  
The Relationship

AbstractThis article studies the relationship between risk attitudes and individual characteristics focusing on the intergenerational transmission of risk preferences. We use a dataset of a sample of Italyn students which allows us to build different measures of risk aversion based, respectively, on a survey asking students about their willingness to invest in a risky asset and about their preferences for job security and on the results of an entry test using explicit penalty points in the case of incorrect answers. In line with the findings highlighted by the existing literature, we find that women are more risk averse than men, more patient subjects are more risk averse, while high-ability students are less risk averse. As far as intergenerational transmission of preferences is concerned, it emerges that students whose fathers are entrepreneurs have a higher propensity to take risks, while students whose fathers are employed in the public sector are more risk averse. Only fathers matter with regards to their children’s risk attitudes. These results are robust to different measures of risk aversion and to different specifications of our model.

scholarly journals A contingency view to novelty

2018 ◽  
Vol 30 (3) ◽  
pp. 218-245 ◽  
Author(s):  
Mona Rashidirad ◽  
Hamid Salimian ◽  
Ebrahim Soltani
Keyword(s):  
Contextual Factors ◽  
Primary Data ◽  
Positive Contribution ◽  
Service Strategy ◽  
Content Type ◽  
Product Service ◽  
Market Turbulence ◽  
Contingency View ◽  
The Impact ◽  
The Relationship

PurposeThe aim of this study is to examine the impact of the fit between product-service strategy and sensing capability on novelty, and the potential moderating impact of contextual factors (i.e. technological and market turbulence) on novelty.Design/methodology/approachIn line with the aim of the study, a quantitative approach is adopted and a multi-item scale survey is designed to collect primary data. Using a mixed mode survey, a total number of 491 questionnaires are collected from a sample of UK-based telecommunications firms. Multiple regression is used to test the hypotheses and predict the outcomes.FindingsThe results support the positive contribution of a contingency approach to the study of the impact of the fit between product-service strategy and sensing dynamic capability on novelty. The results also partially confirm the reinforcing impact of technological and market turbulence on novelty.Originality/valueThis study extends research on product-service strategy and sensing capability by adopting a contingency view, which intends to serve two purposes: to complement the existing reductionistic explanations and to explore how the relationship between product-service strategy and sensing capability could create novelty as well as the degree to which this relationship could be moderated in light of the external contextual factors.

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