Financial Literacy and Investment Decisions Among Traders in the Techiman Municipality

Abstract

The goal of this study was to explore financial literacy and investment decisions among traders in the Techiman Municipality. A sample size of 150 respondents selected for the study. Convenience sampling technique was employed for the study. Questionnaire was employed for the study. Based on the findings it was established that traders lack knowledge in investment. Most of the respondents did not understand the concept of liquidity which describes the extent to which an asset can be promptly bought or sold in the market without affecting the asset's price. Additionally, the study indicated a strong positive relationship between financial literacy and investment decisions. It was realized that that 38.5% of the variations in the investment decisions are accounted for by the changes in the financial knowledge of the trader. The study recommended that more financial literacy programmes should be organized by the financial institution to create awareness. The government should also include financial literacy in the educational curriculum of the basic or elementary schools and higher learning institutions.

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Examining the Contribution of Internal Factors of an Investor in Driving the Investment Decision

“…It's different when the investors have a high level of financial literacy, they tend to diversify their assets in a portfolio and buy equity asset or stock. The similar results were found by Oteng (2019) in Ghana capital market and Abdeldayem (2016) in the Kingdom of Bahrain.…”

“…Financial literacy is a knowledge about fundamental financial concepts such as compound interest, distinguish of nominal and real values, basic knowledge of risk diversification, and time value of money (Lusardi & Mitchell, 2008). Furthermore, Oteng (2019) and Abdeldayem (2016) provide evidence that financial literacy has a positive effect on individual investment decision. This research implies that investors classified in a higher financial literacy group have a higher level of awareness for several financial products including stock.…”

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“…The importance of financial literacy (FL) in the areas of personal budgeting, savings, and investing has been widely acknowledged on a global scale (Davoni & Rodriguez-Planas, 2020;Oteng, 2019). According to research, the results from the Standards & Poor survey reveal that a significant proportion of persons worldwide lack FL, with almost two-thirds falling into this category (Jayaraman, Jambunathan & Counselman, 2018;Klapper & Lusardi, 2020;Klapper, Lusardi & Van Oudheusden, 2015).…”

“…Hence, possessing FL is a crucial asset in facilitating personal growth in relation to financial matters. Within developing economies, it is imperative to educate an average individual about personal budgetary equilibrium, acquiring assets, children's educational investments, and savings for unanticipated circumstances, as well as retirement planning (Oteng, 2019;Sari, Aisyah, Ilnyaa & Hermawan, 2022). The term "average individual" denotes an individual who has successfully completed further education and training phase (Grade 12).…”