scholarly journals Financial Literacy as a Life-Saver: Moderating the Contribution of Behavioral Biases towards Investment Decisions

2019 ◽  
Vol IV (III) ◽  
pp. 106-114
Author(s):  
Faisal Mehmood ◽  
Taqadus Bashir ◽  
Altamash Khan
Keyword(s):  
Financial Markets ◽  
Financial Literacy ◽  
Investment Decisions ◽  
Primary Data ◽  
Financial Instruments ◽  
Financial Decisions ◽  
Decision Outcomes ◽  
Emotional Bias ◽  
Relationship Of ◽  
The Relationship

The assumption of investor rationality had been central to developing an understanding of financial markets and decision outcomes. But the formation and consequent burst of tech-stock bubble changed the paradigm and shifted towards the behavioral interruption aspect of investor psychology. The study aimed to investigate the relationship of two heuristics and one emotional bias with financial decisions and the moderating effect of financial literacy on the said relationship. Primary data is gathered through questionnaire from 208 clients of national savings. Moderation analysis was done and the effect of biases on the financial decisions was found significant enough. Furthermore, financial literacy moderates this relationship positively only for heuristics but no moderation found for selfcontrol. The policymakers can design their financial instruments and strategies by keeping in view the implication of biases on investor’s decision. Moreover, periodic financial literacy sessions can be arranged to create awareness among investors and advisors.

Trust and Household Portfolios

2021 ◽  
pp. 78-97
Author(s):  
Diego Lubian
Keyword(s):  
Financial Markets ◽  
Empirical Evidence ◽  
Financial Literacy ◽  
Risky Assets ◽  
Financial Decisions ◽  
Portfolio Decisions ◽  
Financial Decision ◽  
Financial Portfolio ◽  
Socio Demographic Factors ◽  
The Relationship

This article provides empirical evidence on the existence and the extent of the influence of trust in financial decisions using individual data on Italian households from the Survey on Household Income and Wealth, 2010. This article studies the relationship between, trust in people, trust in banks and more detailed previously unexplored dimensions of trust, and household financial portfolio decisions. The article provides empirical evidence that trust in people and trust in banks affect both participation in financial markets, the share of risky assets and the diversification of the financial portfolio, controlling socio-demographic factors, risk aversion, and financial literacy as well. The article finds that trust is important for individuals with a lower level of education who have limited possibilities to acquire and process information on financial markets need to rely in trustworthy relationship to define their financial portfolio. Further, we present evidence that the main channel by which trust affects financial decision making and determines too little participation, a lower share of risky assets in the financial wealth and poorly diversified portfolios is trust in family and friends.

Trust and Household Portfolios

2020 ◽  
Vol 9 (1) ◽  
pp. 8-26
Author(s):  
Diego Lubian
Keyword(s):  
Financial Markets ◽  
Empirical Evidence ◽  
Financial Literacy ◽  
Risky Assets ◽  
Financial Decisions ◽  
Portfolio Decisions ◽  
Financial Decision ◽  
Financial Portfolio ◽  
Socio Demographic Factors ◽  
The Relationship

This article provides empirical evidence on the existence and the extent of the influence of trust in financial decisions using individual data on Italian households from the Survey on Household Income and Wealth, 2010. This article studies the relationship between, trust in people, trust in banks and more detailed previously unexplored dimensions of trust, and household financial portfolio decisions. The article provides empirical evidence that trust in people and trust in banks affect both participation in financial markets, the share of risky assets and the diversification of the financial portfolio, controlling socio-demographic factors, risk aversion, and financial literacy as well. The article finds that trust is important for individuals with a lower level of education who have limited possibilities to acquire and process information on financial markets need to rely in trustworthy relationship to define their financial portfolio. Further, we present evidence that the main channel by which trust affects financial decision making and determines too little participation, a lower share of risky assets in the financial wealth and poorly diversified portfolios is trust in family and friends.

The Impact of Financial Literacy on Financial Preparedness for Retirement in the Small and Medium Enterprises Sector in Uganda

2020 ◽  
Vol 9 (3) ◽  
pp. 26-41
Author(s):  
Colin Agabalinda ◽  
Alain Vilard Ndi Isoh
Keyword(s):  
Financial Literacy ◽  
Small And Medium Enterprises ◽  
Group Analysis ◽  
Moderating Effect ◽  
Primary Data ◽  
Retirement Preparedness ◽  
Medium Enterprises ◽  
The Impact ◽  
The Relationship ◽  
Effect Of Age

The study investigated the direct effects of financial literacy (knowledge, skills, and attitudes) on financial preparedness for retirement and the moderating effect of age among the small and medium enterprises in Uganda. Primary data was collected from a sample of n = 380 selected from the SME workforce. Descriptive analysis was run on SPSS, while validity and reliability of the measurement items yielded satisfactory composite reliability scores and average variance explained (AVE) scores for all items. Structural equation modelling (SEM) was used to test the hypotheses and multi-group analysis conducted to test for the moderating effect of age on the relationship between financial literacy and retirement preparedness. The results revealed that knowledge and skills were significant predictors of retirement preparedness. However, ‘attitude' was not a significant predictor, and age had no moderating effect on the relationship between the study variables. These findings present practical implications for policymakers and financial educators in a developing country context.

Heuristic biases in investment decision-making and perceived market efficiency

2018 ◽  
Vol 10 (1) ◽  
pp. 85-110 ◽  
Author(s):  
Syed Zulfiqar Ali Shah ◽  
Maqsood Ahmad ◽  
Faisal Mahmood
Keyword(s):  
Financial Markets ◽  
Market Efficiency ◽  
Negative Impact ◽  
Investment Decisions ◽  
Sampling Technique ◽  
Investment Strategy ◽  
Individual Investors ◽  
Content Type ◽  
Specific Investment ◽  
The Relationship

Purpose This paper aims to clarify the mechanism by which heuristics influences the investment decisions of individual investors, actively trading on the Pakistan Stock Exchange (PSX), and the perceived efficiency of the market. Most studies focus on well-developed financial markets and very little is known about investors’ behaviour in less developed financial markets or emerging markets. The present study contributes to filling this gap in the literature. Design/methodology/approach Investors’ heuristic biases have been measured using a questionnaire, containing numerous items, including indicators of speculators, investment decisions and perceived market efficiency variables. The sample consists of 143 investors trading on the PSX. A convenient, purposively sampling technique was used for data collection. To examine the relationship between heuristic biases, investment decisions and perceived market efficiency, hypotheses were tested by using correlation and regression analysis. Findings The paper provides empirical insights into the relationship of heuristic biases, investment decisions and perceived market efficiency. The results suggest that heuristic biases (overconfidence, representativeness, availability and anchoring) have a markedly negative impact on investment decisions made by individual investors actively trading on the PSX and on perceived market efficiency. Research limitations/implications The primary limitation of the empirical review is the tiny size of the sample. A larger sample would have given more trustworthy results and could have empowered a more extensive scope of investigation. Practical implications The paper encourages investors to avoid relying on heuristics or their feelings 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 expensive errors, which 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 a more efficient market. So, it is necessary to focus on a specific investment strategy to control “mental mistakes” by investors, due to heuristic biases. Originality/value The current study is the first of its kind, focusing on the link between heuristics, individual investment decisions and perceived market efficiency within the specific context of Pakistan.

scholarly journals HUBUNGAN GAYA KEPEMIMPINAN TERHADAP PRODUKTIVITAS KERJA KARYAWAN BAGIAN LIQUID PT ITRASAL YANG DIMEDIASI OLEH MOTIVASI KERJA

2018 ◽  
Vol 15 (01) ◽  
pp. 51
Author(s):  
Endang Rachmawati
Keyword(s):  
Leadership Style ◽  
Positive Relationship ◽  
Work Motivation ◽  
Primary Data ◽  
Linear Regression Method ◽  
Employee Productivity ◽  
Independent Variable ◽  
R Value ◽  
Relationship Of ◽  
The Relationship

INTISARI    Penelitian ini bertujuan untuk mengidentifikasi hubungan Gaya Kepemimpinan terhadap Produktivitas Karyawan PT. ITRASAL yang dimediasi oleh Motivasi Kerja. Penelitian ini menggunakan rancangan penelitian metode asosiatif dengan jenis penelitian  survey  yang akan mengungkapkan hubungan dua variabel, yaitu Gaya Kepemimpinan sebagai variabel bebas dan Produktivitas sebagai variabel terikat. Data primer berasal dari kuesioner yang disebarkan kepada karyawan bagian Liquid Departemen Produksi PT ITRASAL, dan hasil diskusi dengan karyawan bagian tersebut. Selanjutnya data yang diperoleh dianalisis menggunakan metode korelasi dan regresi linear. Dari penelitian ini diperoleh hasil bahwa nilai r untuk variabel Gaya Kepemimpinan terhadap Produktivitas adalah 0,557 dan nilai t adalah 8.951. Nilai r untuk variabel Gaya Kepemimpinan terhadap Motivasi adalah 0,278 dan nilai t adalah 5,022. Terdapat hubungan positif antara Gaya Kepemimpinan terhadap Produktivitas dan Gaya Kepemimpinan berpengaruh positif terhadap Motivasi. Nilai r untuk variabel Motivasi terhadap Produktivitas adalah 0,377 dan nilai t adalah 6,251. Terdapat hubungan positif antara Motivasi terhadap Produktivitas. Kata kunci : Gaya kepemimpinan, Motivasi kerja, Produktivitas karyawan  ABSTRACT  This study aims to identify the relationship of leadership style to employee productivity PT. ITRASAL is mediated by work motivation. This research uses the research design of associative method with the type of survey research that will reveal the relationship of two variables, namely Leadership Style as independent variable and productivity as dependent variable. Primary data comes from a questionnaire distributed to employees of the Liquid Department of Production Department of PT ITRASAL, and the results of discussions with employees of that section. Further data obtained were analyzed using correlation and linear regression method. From this research, the result that r value for leadership style variable to productivity is 0,557 and t value is 8,951. The r value for the leadership style variable for motivation is 0.278 and the t value is 5.022. There is a positive relationship between leadership style on productivity and leadership style have a positive effect on motivation. The r value for the Motivation variable on productivity is 0.377 and the t value is 6.251. There is a positive relationship between motivation to productivity. Keywords: Leadership style, Motivation work, Employee productivity

scholarly journals Bridging and Bounding Social Capital: Social Interaction Analysis of Islets Islanders in Wakatobi Marine National Park

2020 ◽  
Vol 8 (1) ◽  
pp. 30-46
Author(s):  
Taane La Ola ◽  
Nur Isiyana Wianti ◽  
Muslim Tadjuddah
Keyword(s):  
Social Capital ◽  
National Park ◽  
Interaction Analysis ◽  
Primary Data ◽  
Bonding Social Capital ◽  
Bridging Social Capital ◽  
The Social ◽  
Relationship Of ◽  
The Relationship ◽  
Depth Interviews

The purpose of this paper is to provide an overview of the differences in the strength of social capital that is bonding and bridging two community groups, namely land-dwellers and Sama Bajo boat-dwellers in three islands in Wakatobi Marine National Park. This study used a post-positivistic research paradigm, and the primary data were collected by using a questionnaire to 240 respondents who represented the group of land-dwellers and Sama Bajo boat-dwellers on the islands of Wangi-wangi, Kaledupa, and Tomia. This research was also supported by qualitative data through in-depth interviews from several informants and desk studies. The results showed that bridging social capital relations tend to be weak in the two forms of interactions between the Sama Bajo and the land-dwellers on Wangi-wangi Island and Kaledupa Island, while bridging social capital tend to be secured in Tomia Island. We found that the social context through the historical links in the past and identity played a role in the relationship of bridging social capital and bonding social capital in the three communities as an analytical unit of this research.  

scholarly journals Pengaruh Financial Literacy dan Financial Behavior terhadap Keputusan Investasi pada Ibu-Ibu PKK Kota Jambi

2020 ◽  
Vol 5 (2) ◽  
pp. 263
Author(s):  
Indah Mutiara ◽  
Efandri Agustian
Keyword(s):  
Linear Regression ◽  
Multiple Linear Regression ◽  
Financial Literacy ◽  
Sampling Method ◽  
Investment Decisions ◽  
Sampling Technique ◽  
T Test ◽  
Financial Behavior ◽  
Primary Data ◽  
Regression Test

This study aims to determine the level of influence of Financial Literacy and Financial Behavior toward investment decisions. The data used in this study are primary data, the sample used in this study were PKK members in Jambi City. The sampling technique was carried out by using purposive sampling method. The results obtained by using multiple linear regression test Y = 2,337 + 0.159 X1 + 0.518 X2, and the test of this study using the f-test, R2-test and t-test. The results of this study indicate that partially the Financial Literacy and Financial Behavior affect investment decisions. 

scholarly journals Analisis Pengaruh Faktor-Faktor Literasi Keuangan Terhadap Keputusan Berinvestasi Pada Asuransi Jiwa di Kota Palembang

2021 ◽  
Vol 4 (3) ◽  
pp. 798-812
Author(s):  
Resa Novita ◽  
Isni Andriana ◽  
Kemas M Husni Thamrin
Keyword(s):  
Life Insurance ◽  
Financial Literacy ◽  
Structural Equation ◽  
Quantitative Research ◽  
Investment Decisions ◽  
Partial Least Square ◽  
Least Square ◽  
Primary Data ◽  
Equation Modeling ◽  
And Gender

The purpose of this research is to analyze the effect perceptions about financial literacy factors against the investment decisions on life insurance in Palembang. The population in this study is the owner of life insurance in Palembang, the sampling in this study is using the Purposive Sampling method with 50 respondents as samples. The type of research used is quantitative research with primary data sources obtained from distributing questionnaires to respondents. The data analysis technique in this research are descriptive and inferential statistical analysis using Structural Equation Modeling (SEM) with smartPLS (Partial Least Square) 3.0 software. The results showed that the perception of age and gender has no significant effect against the investment decisions on life insurance in Palembang, meanwhile the perception of education level and income have a significant effect against the investment decisions on life insurance in Palembang. Keywords: Age, Gender, Level of Education, Income, Investment Decisions

Effect of Disposition Effect on Investment Decision Making in Property Market in Plateau State, Nigeria

2019 ◽  
pp. 83-98
Author(s):  
Dashol Ishaya Usman ◽  
Mary Pam
Keyword(s):  
Decision Making ◽  
Behavioral Finance ◽  
Investment Decision ◽  
Investment Decisions ◽  
Primary Data ◽  
Property Market ◽  
Financial Decisions ◽  
Descriptive Research ◽  
Investment Decision Making ◽  
Plateau State

The purpose of the chapter was to establish the effect of disposition on investment decision making in property market in Plateau State, Nigeria. Descriptive research design was used in the study. Primary data was collected using standard questionnaires with both closed and open-ended questions. The regression analysis results confirmed that there was a significant positive linear relationship between disposition and investor investment decision making in property market in Plateau State in Nigeria. The study concluded that disposition effects bias does not alter rationality in investment decision making. Disposition affected investment decisions. The main recommendation for investors is to make constant attempts to increase their awareness on behavioral finance by educating themselves on the field. Studying about the biases and reflecting on their decisions are likely to help achieve better self-understanding of the extent and manner to which they are influenced by emotions while making financial decisions under uncertainty.

scholarly journals The Assessment of Financial Literacy: New Evidence from Europe

2019 ◽  
Vol 7 (3) ◽  
pp. 54 ◽  
Author(s):  
Nicolini ◽  
Haupt
Keyword(s):  
Financial Literacy ◽  
Selection Process ◽  
Financial Education ◽  
Assessment Tools ◽  
Financial Behaviors ◽  
Financial Decisions ◽  
The Uk ◽  
New Evidence ◽  
The Relationship ◽  
Literacy Research

The hypothesis that people with more financial literacy make better financial decisions and show positive financial behaviors is crucial for more than one stakeholder. A weak connection between financial literacy and financial behaviors jeopardizes the opportunity to invest in financial education and to develop a consumer protection framework based on the chance to develop aware and responsible financial consumers. This study uses data from different countries (Germany, France, Italy, Sweden, the UK), using surveys devised and fielded specifically to measure financial literacy and in order to assess if the availability of a broad set of items on financial literacy allows to develop new measures of financial literacy to better understand the relationship between financial literacy and financial behaviors. The well-established Lusardi–Mitchell questions are compared with measures that differ in terms of number of items (the “50-items” index), range of topics (the “5-specific” index), or selection process of the items (the “unbiased” index). Results support the hypothesis that the Lusardi–Mitchell questions remain a good measure in a first-step analysis, but a deeper understanding of the connection between financial literacy and financial behaviors benefits from the measures proposed in the study, that should be considered as additional assessment tools in financial literacy research.

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