Impact of Financial Literacy, Financial Knowledge, Moderating Role of Risk Perception on Investment Decision

2016 ◽  
Author(s):  
Shadnan Nan Khan
Keyword(s):  
Risk Perception ◽  
Financial Literacy ◽  
Investment Decision ◽  
Financial Knowledge ◽  
Moderating Role

scholarly journals Environment and Potential Affecting Investment Decision for Accommodation Business: Case of Less Visited Area in Samut Songkhram and Phatthalung Province

2021 ◽  
Vol 58 (2) ◽  
pp. 1706-1717
Author(s):  
Krisada Sungkhamanee, Piyadhida Sungkhamanee
Keyword(s):  
Financial Literacy ◽  
Investment Decision ◽  
Investment Decisions ◽  
Business Case ◽  
Potential Factors ◽  
Short Term Investment ◽  
The Impact ◽  
Moderating Role

Investment decisions have great importance in different sectors of various countries and these decisions are the basis on which the outcomes of the investments are based. However, there might be certain factors that might lead to the incorrect long term and short term investment decisions. In this regard, the current study has been conducted with the core motive to explore the impact casted by the environment and potential factors i.e. salience and overconfidence on the long term investment decisions for accommodation business along with the moderation of a variable i.e. financial literacy. To fulfill this objective, the researcher has collected data from the investors of accommodation businesses in Thailand. The collected data has been subjected to different statistical techniques and tools for analysis purpose and the results have been obtained. The results obtained by the analysis of the collected data indicate that salience and overconfidence have significant impact on the long term investment decision. In addition, the moderating role of financial literacy has also been found as significant in the study. The results suggest that the investors of the accommodation business must consider the aspects of salience and overconfidence before taking any long term investment decision to avoid failure of the investment decision.    

scholarly journals Impact of Behavioral Biases on Investment Decision Making with Moderating Role of Financial Literacy

2018 ◽  
Vol 6 (2) ◽  
pp. 34-41
Author(s):  
Rizwan Khalid ◽  
◽  
Muhammad Javed ◽  
Khurram Shahzad ◽  
◽  
...  
Keyword(s):  
Decision Making ◽  
Financial Literacy ◽  
Positive Impact ◽  
Investment Decision ◽  
Structure Questionnaire ◽  
Investment Decision Making ◽  
Overconfidence Bias ◽  
The Impact ◽  
Moderating Role

The objective of this study is to examine the Impact of Overconfidence bias and Herding bias on Investment Decision Making with Moderating Role of Financial Literacy. The population was Investor, Employee and Graduate Student. A sample of 200 was selected using convenience technique. Data were collected through structure questionnaire adopted from different papers. Correlation and Regression analysis were performed to examine the result. The Results show that overconfidence bias and herding bias have a positive impact on investment decision making and Financial Literacy has positive impact on investment decision making. Based on the results and discussions of the study findings as well as the limitations, theoretical and practical implications of the study have been provided.

scholarly journals EFFECT OF EMOTIONAL INTELLIGENCE AND FINANCIAL LITERACY ON INVESTMENT DECISION MAKING WITH A MEDIATING ROLE OF RISK PERCEPTION

2014 ◽  
Vol 02 (02) ◽  
pp. 12-20
Author(s):  
Sahar Parvez ◽  
Keyword(s):  
Emotional Intelligence ◽  
Risk Perception ◽  
Financial Literacy ◽  
Stock Exchange ◽  
Investment Decision ◽  
Investment Decisions ◽  
Mediating Role ◽  
Investment Decision Making ◽  
The Impact

This research paper examines the impact of emotional intelligence and financial literacy on investment decision with a mediating role of risk perception. The data is collected by using questionnaire, from a sample of 152 investors, from stock exchange and banks. The results support that to make adequate investment decisions, investors should be financially literate and have control on their emotions. However, risk perception of investors does not mediate this relationship.

Overconfidence heuristic-driven bias in investment decision-making and performance: mediating effects of risk perception and moderating effects of financial literacy

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Maqsood Ahmad ◽  
Syed Zulfiqar Ali Shah
Keyword(s):  
Decision Making ◽  
Risk Perception ◽  
Financial Literacy ◽  
Investment Decision ◽  
Investment Decisions ◽  
Individual Investors ◽  
Content Type ◽  
Investment Decision Making ◽  
And Performance

PurposeThis paper aims to show how overconfidence influences the decisions and performance of individual investors trading on the Pakistan Stock Exchange (PSX), with the mediating role of risk perception and moderating role of financial literacy.Design/methodology/approachThe deductive approach was used, as the research is based on the theoretical framework of behavioural finance. A questionnaire and cross-sectional design were employed for data collection from the sample of 183 individual investors trading on the PSX. Hypotheses were tested through correlation and regression analysis. The Baron and Kenny method was used to test the mediation effect of risk perception and the moderation effect of financial literacy. The results of mediation and moderation were also authenticated through the PROCESS and structural equation modelling (SEM) technique.FindingsThe results suggest that risk perception fully mediates the relationships between the overconfidence heuristic on the one hand, and investment decisions and performance on the other. At the same time, financial literacy appears to moderate these relationships. The results suggest that overconfidence can impair the quality of investment decisions and performance, while financial literacy and risk perception can improve their quality.Practical implicationsThe paper encourages investors to base decisions on their financial capability and experience levels and to avoid relying on heuristics or their sentiments when making investments. It provides awareness and understanding of heuristic biases in investment management, which could be very useful for decision makers and professionals in financial institutions, such as portfolio managers and traders in commercial banks, investment banks and mutual funds. This paper helps investors to select better investment tools and avoid repeating the expensive errors that occur due to heuristic biases. They can improve their performance by recognizing their biases and errors of judgment, to which we are all prone, resulting in better investment decisions and a more efficient market. The paper also highlights the importance on relying on professional knowledge, giving it greater weight than feelings and biases.Originality/valueThe current study is the first to focus on links between overconfidence, financial literacy, risk perception and individual investors' decisions and performance. This article enhanced the understanding of the role that heuristic-driven bias plays in the investment management, and more importantly, it went some way towards enhancing understanding of behavioural aspects and their influence on the investment decision-making and performance in an emerging market. It also adds to the literature in the area of behavioural finance specifically the role of heuristics in investment strategies; this field is in its initial stage, even in developed countries, while, in developing countries, little work has been done.

scholarly journals Moderating Effect of Risk Perception on Financial Knowledge, Literacy and Investment Decision

2019 ◽  
pp. 34-44
Keyword(s):  
Risk Perception ◽  
Financial Literacy ◽  
Investment Decision ◽  
Investment Decisions ◽  
Moderating Effect ◽  
Partial Least Square ◽  
Least Square ◽  
Financial Knowledge ◽  
Wealth Accumulation ◽  
Financial Decisions

Financially unsophisticated investors who consistently make sub-optimal financial decisions may suffer lasting consequences for long-term wealth accumulation and welfare. This study examines moderating effect of risk perception on financial knowledge, literacy and investment decision. Data was collected from 378 investors through the aids of structured questionnaires. The research hypotheses were tested using partial Least-square (PLS) regression. The findings reveals that there is positive and significant effect between financial knowledge, risk perception and investment decisions, while positive but insignificant effect was found between financial literacy and investment decisions. However, risk perception moderates the effect of financial literacy, investment knowledge on investment decisions. It recommends that investors, policymakers and individuals investors should embark on various educational programmes, to further influence the level of their investment decisions before committing their hard earning fund into project.

scholarly journals Moderating Effect of Risk Perception on Financial Knowledge, Literacy and Investment Decision

2019 ◽  
Vol 1 (1) ◽  
pp. 34-44 ◽  
Author(s):  
Samuel Alaba Ademola ◽  
Aishat Sarki Musa ◽  
Idachaba Odekina Innocent
Keyword(s):  
Risk Perception ◽  
Financial Literacy ◽  
Investment Decision ◽  
Investment Decisions ◽  
Moderating Effect ◽  
Partial Least Square ◽  
Least Square ◽  
Financial Knowledge ◽  
Wealth Accumulation ◽  
Financial Decisions

Financially unsophisticated investors who consistently make sub-optimal financial decisions may suffer lasting consequences for long-term wealth accumulation and welfare. This study examines moderating effect of risk perception on financial knowledge, literacy and investment decision. Data was collected from 378 investors through the aids of structured questionnaires. The research hypotheses were tested using partial Least-square (PLS) regression. The findings reveals that there is positive and significant effect between financial knowledge, risk perception and investment decisions, while positive but insignificant effect was found between financial literacy and investment decisions. However, risk perception moderates the effect of financial literacy, investment knowledge on investment decisions. It recommends that investors, policymakers and individuals investors should embark on various educational programmes, to further influence the level of their investment decisions before committing their hard earning fund into project.

Financial access and economic development: the moderating role of financial consumer protection

2019 ◽  
Vol 15 (4) ◽  
pp. 406-424 ◽  
Author(s):  
Maryam Kriese ◽  
Joshua Yindenaba Abor ◽  
Elikplimi Agbloyor
Keyword(s):  
Economic Development ◽  
World Bank ◽  
Financial Literacy ◽  
Compliance Monitoring ◽  
Financial Access ◽  
Policy Makers ◽  
Content Type ◽  
The World Bank ◽  
Moderating Role

Purpose The purpose of this paper is to examine the moderating role of financial consumer protection (FCP) in the access–development nexus. Design/methodology/approach The study is based on cross-country data on 102 countries surveyed in the World Bank Global Survey on FCP and Financial Literacy (2013). The White heteroscedasticity adjusted regressions and Two-stage least squares regressions (2SLS) are used for the estimation. Findings Interactions between FCP regulations that foster fair treatment, disclosure, dispute resolution and recourse and financial access have positive net effects on economic development. However, there is no sufficient evidence to suggest that interactions between financial access and enforcement and compliance monitoring regulations have a significant effect on economic development. Practical implications First, policy makers should continue with efforts aimed at instituting FCP regimes as part of strategies aimed at broadening access to financial services for enhanced economic development. Second, instituting FCP regimes per se may not be enough. Policy makers need to consider possible intervening factors such as the provision of adequate resources and supervisory authority, for compliance monitoring and enforcement to achieve the expected positive effect on economic development. Originality/value This study extends evidence in the law–finance–growth literature by providing empirical evidence on the effect of legal institution specific to the protection of retail financial consumers on the access–development nexus using a nouvel data set, the World Bank Global survey on FCP and Financial Literacy (2013).

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