scholarly journals Impact of Financial Literacy Levels among Sri Lankan Investors on Investment Choices

2021 ◽  
Vol 1 (2) ◽  
pp. 123
Author(s):  
S. T. M. S. Tennekoon ◽  
C. Liyanage
Keyword(s):  
Financial Literacy ◽  
Sri Lankan ◽  
Investment Choices

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.

scholarly journals How Does Technological and Financial Literacy Influence SME Performance: Mediating Role of ERM Practices

Information ◽  
2020 ◽  
Vol 11 (6) ◽  
pp. 297
Author(s):  
K.M.M.C.B. Kulathunga ◽  
Jianmu Ye ◽  
Saurabh Sharma ◽  
P.R. Weerathunga
Keyword(s):  
Financial Literacy ◽  
Structural Model ◽  
Sri Lankan ◽  
Mediating Role ◽  
Knowledge Based ◽  
Enterprise Risk ◽  
Managerial Implications ◽  
Essential Knowledge ◽  
The Relationship

The knowledge-based view (KBV) in the development of small and medium-sized enterprises (SMEs) is a debatable topic in the current literature. Although convergence of technological and financial literacy (techno-finance literacy) is an essential knowledge-based tool to address rapid digitalization of business, the influence of techno-finance literacy in the development of SMEs is still not adequately researched. Drawing upon KBV, we developed a single-mediator structural model with an aim to explore the effect of techno-finance literacy and enterprise risk management (ERM) practices (applications) on the performance of SMEs. A self-administered structured questionnaire was employed to collect data from 319 chief financial offers (CFOs) in Sri Lankan SMEs. The outcome of our study highlights that techno-finance literacy is a significant determinant of two endogenous constructs, namely, SME performance and ERM practices. Furthermore, ERM practices of SMEs were also positively affected to the SME performance. Moreover, ERM practices were observed to have a partial mediation on the relationship between financial literacy and SME performance. These findings form the basis for theories in techno-finance literacy and SME performance, as well as present managerial implications to enhance the performance of SMEs.

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.

scholarly journals The Impact of Financial Literacy on Women’s Economic Empowerment in Developing Countries: A Study Among the Rural Poor Women in Sri Lanka

2020 ◽  
Vol 16 (2) ◽  
pp. 31
Author(s):  
Kumari D.A.T. ◽  
Ferdous Azam S. M. ◽  
Siti Khalidah
Keyword(s):  
Sri Lanka ◽  
Time Allocation ◽  
Financial Literacy ◽  
Financial Knowledge ◽  
Economic Empowerment ◽  
Sri Lankan ◽  
Rural Poor ◽  
Significant Determinant ◽  
The Impact ◽  
Over Time

The World Bank, in 2016 defined women’s empowerment as a principle for sustainable development and for the fulfilment of the Millennium Development Goals (MDG). Economic empowerment has been identified as a main section of women’s empowerment in literature. Economic empowerment directly influences the improvement of women’s decision-making power and their financial well-being. Previous researchers have explored many antecedents of women’s economic empowerment; among them financial literacy is the most significant determinant in literature. Financial literacy defines as a combination of financial knowledge, financial skills and financial attitudes. Further many researchers argue that financial literacy has greater importance for increasing economic empowerment among women. However, the most important argument is whether financial literacy is a significant determinant of women’s economic empowerment in Sri Lankan context. Therefore, the present study mainly focuses on exploring the impact of financial literacy among rural poor on their economic empowerment in the context of Sri Lanka. The sample for this study was drawn from under privileged families who are living under the poverty line in 09 provinces in the country. Altogether 426 questionnaires were distributed and 386 completed questionnaires were taken for final analysis. There were 24 items employed to represents 5 main dimensions to measure the women’s economic empowerment (i.e.: 1. Decision-making power, 2. Control over the use of income and expenditure, 3. Leadership in the community, 4. Control over time allocation and 5. Financial wellbeing). And financial literacy was tested based on 25 items which was employed to determine the 04 key factors (i.e.: 1. Financial awareness, 2. Financial knowledge, 3. Financial skills, 4. Financial attitude and 5. Financial behavior). The reliability was measured by Cronbach’s Alpha coefficients. Data were collected with the assistance of a researcher administrated questionnaire. The sample was selected based on the multilevel mixed sampling method and the unit of analysis was the women headed households in rural areas representing 25 Districts represented each province of the country. Furthermore, a partial least squares structural equation model (PLS-SEM) was employed as the principle data analysis approach, and Smart PLS 3 was employed as the main analytical software. However, descriptive analysis was done by using SPSS 22. The findings revealed that, the financial literacy has significant impact on women’s economic empowerment among the rural poor. However, when it was considered under separate dimensions, financial wellbeing and control over time allocation have significant impact on financial literacy among rural women. Further it was noted that all the hypotheses were accepted after the analysis. Therefore, researcher concluded that financial literacy can be considered as a significant determinant of women economic empowerment in Sri Lankan context as well. Finally, the researcher provides some suggestions for government policy decision makers to develop financial literacy level for enhancing women’s economic empowerment in Sri Lanka.

scholarly journals Persistence is futile: Chasing of past performance in repeated investment choices

2021 ◽  
Author(s):  
Leonardo Weiss-Cohen ◽  
Philip Warren Stirling Newall ◽  
Peter Ayton
Keyword(s):  
Mutual Fund ◽  
Financial Literacy ◽  
Behavioral Interventions ◽  
Opportunity To Learn ◽  
Past Performance ◽  
Investment Experience ◽  
Repeated Choice ◽  
The Impact ◽  
Investment Choices

When deciding where to invest, individuals choose mutual funds based on recent past performance, despite standard mandated disclaimers that "past performance does not guarantee future results." Investors would receive better long-term returns by choosing funds with lower fees. We explored the impact of fees and past performance on realistic mutual fund selections across three preregistered repeated choice experiments (N=1,600), while manipulating the presence of disclaimers between-participants. Participants persistently chased past performance despite the opportunity to learn about the futility of this strategy during sixty repeated decisions with feedback. The standard regulatory-mandated disclaimer did not help most participants, compared to giving no advice at all, and was even counter-productive for participants with low levels of financial literacy. An alternative disclaimer which explicitly highlighted the advantages of fee minimization reliably helped participants. We show how individuals who lack both financial literacy and prior investment experience are the most susceptible to making poor mutual fund choices, and can benefit the most from behavioral interventions such as the new disclaimer tested here. We discuss how these results generalize into real-world investment decisions, and how to design more efficient disclaimers that can be used beyond investment choices.

scholarly journals Towards Improving Households’ Investment Choices in Tanzania: Does Financial Literacy Really Matter?

2020 ◽  
Vol 8 (2) ◽  
pp. 29
Author(s):  
Josephat Lotto
Keyword(s):  
Financial Literacy ◽  
Early Stage ◽  
Adult Population ◽  
Secondary Data ◽  
Analytical Techniques ◽  
Middle Income ◽  
Literacy Gap ◽  
Socio Demographic Factors ◽  
The Impact ◽  
Investment Choices

This paper primarily aims to assess the impact of financial literacy on households’ investment choices. The paper employs secondary data from the FinScope survey (2017) conducted by Financial Sector Deepening Trust (FSDT). In particular, the study aims at establishing whether the choices of investment platforms are influenced by the financial literacy level of the heads of households. To do so, the study employed both bivariate and multivariate analytical techniques. The study finds that financial literacy is positively and significantly associated with household investment choices. More specifically, as households become more financially literate, they divert from investing in informal groups towards more formal investment platforms such as investment accounts, agricultural ventures as well as personal business. Such observations may be partly attributable to the facts that individuals whose financial literacy is sound enough are more likely to be equipped with skills and knowledge of risks associated with investment opportunities and some other several financial products. The study also reveals that financial literacy is significantly associated with households’ socio-demographic factors, and that the adult population exhibits a large financial literacy gap and, therefore, adults should not be considered as a homogenous group—instead, gender, age, education and income levels of the households, which are showcased in this study, should also be taken into consideration. The study opines that, because most of households, as revealed in the survey from which the employed dataset is based, are hailing from rural settings where agriculture is the main economic activity, we establish that agricultural ventures require a complete revamp for Tanzania to become a middle-income economy through its industrialization agenda. The study also proposes the financial literacy programmes to be rolled on to students from early stage of their education such as secondary schools.

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