Financial literacy, household portfolio choice and investment return

Li, Jianjun; Li, Qize; Wei, Xu

doi:10.1016/j.pacfin.2020.101370

Cited by 73 publications

(47 citation statements)

References 29 publications

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“…Previous research did not focus on the relationship between financial education and risky financial asset holding directly or indirectly. Many studies examined the relationship between financial literacy and financial market participation (Arrondel, Debbich & Savignac, 2012;Christelis, Jappelli & Padula, 2010;Li, Li & Wei, 2020). However, we estimate the relationship between financial education, a factor never used in previous research, and risky financial asset holding, and find the positive association between them.…”

Section: Introductionmentioning

confidence: 70%

“…By studying the portfolio allocation decisions of Australian households, Cardak and Wilkins (2009) found that financial awareness and knowledge play important roles in determining risky asset holdings. Several studies also found that those who are more financially literate are more likely to participate in financial markets, invest in stocks (Arrondel, Debbich & Savignac, 2012;Christelis, Jappelli & Padula, 2010;Cupák et al, 2020;Li, Li & Wei, 2020;Rooij, Lusardi & Alessie 2011;Yoong, 2011) and have better diversification and more frequent stock trading (Graham, Harvey & Huang, 2009). For example, using a panel dataset covering a representative sample of the Dutch population, Rooij, Lusardi and Alessie (2011) found that financial literacy has effects on financial decision-making, especially on stock investment.…”

Section: Financial Literacy As the Mediatormentioning

confidence: 99%

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Consumer financial education and risky financial asset holding in China

Zhu

Xiao

2021

Int J Consumer Studies

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Risky financial asset holding is arguably a desirable financial behavior that contributes to consumer financial wellbeing. However, studies about associations between consumer financial education and risky financial asset holding in China remain limited. To fill this gap, using data from the 2015 China Household Finance Survey, this study examined the association between financial education and risky financial asset holdings and explored its mediators. Results from Probit regressions showed that financial education was positively associated with the household risky financial asset holding. Further analyses based on the mediating model found that financial literacy, economic and financial information search, and risk tolerance were mediating factors in the association between financial education and risky financial asset holding. The results have policy implications for improving consumer financial education and financial market participation.

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Section: Introductionmentioning

confidence: 70%

Section: Financial Literacy As the Mediatormentioning

confidence: 99%

Consumer financial education and risky financial asset holding in China

Zhu

Xiao

2021

Int J Consumer Studies

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“…However, this is not exclusively a challenge facing the stock market in Kurdistan. As Li et al (2020) and Rooij, Lusardi, & Alessie (2011) discovered in the Netherlands, financial literacy and knowledge have a major impact on people's perspectives. This is further supported by the research of Atkinson & Messy (2012), who investigated some 21 countries.…”

Section: Social Knowledge and Economic Awarenessmentioning

confidence: 99%

“…However, the greater the number of financial instruments, the better, as this shows that the participants. Financial literacy and the understanding of investors can influence their decisions regarding investment activities (Li, Li, & Wei, 2020).…”

Section: Introductionmentioning

confidence: 99%

The Impact of Social Knowledge on the Efficiency of the Financial Markets: A Case Study on the Erbil Stock Exchange

Nanakali

Agha

Othman

2021

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This study was designed to investigate the factors that can have an impact on the efficiency of financial markets, and the Erbil Stock Exchange was chosen as a case study. The researchers sought to evaluate the level of social knowledge by concentrating on certain dimensions which have a direct influence on the public’s perspective regarding financial markets – namely religion, culture and economic awareness – and the number of people participating in the sale and purchase of stocks and shares. This study tested the hypotheses by applying some statistical analyses, and the outputs are detailed in the tables, figures and factors. According to the results, the efficiency of the stock market is affected by monthly income, culture and religion, and public experience. It was also found that there is no difference in perspective between men and women regarding investing in the stock market. This is supported by the hypothesis test results, which indicated that there is no correlation between gender and economic awareness, number of participators, culture, and religion. The results of the factor analyses show that there is a significant correlation between religion, culture, economic awareness and the number of people participating and social knowledge, and that these factors significantly affect the efficiency of the stock market.

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“…They concluded that being able to answer these two questions correctly was strongly associated with more diversified portfolios, controlling for other respondent characteristics and measures of risk aversion. Recent evidence from China suggests that financial literacy boosted younger households' risky investments, but lowered returns for older, less educated households based on a sample of 3,882 households (Li et al, 2020). Grohmann (2018) showed that higher financial literacy led to improved savings and borrowing decisions among 491 urban middle-class persons in Thailand.…”

Section: Introductionmentioning

confidence: 99%

Financial Literacy and Financial Decision-Making at Older Ages

et al. 2020

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How well older households manage their wealth holdings is an important determinant of their financial security during retirement, yet little is known about their financial decision-making and how this relates to their financial literacy. Our paper fills this gap by measuring financial literacy among older persons in the Singapore Life Panel and examining its association with timely credit card debt repayment, stock market participation, and age-based investment risk diversification. Most older respondents understand interest compounding and inflation, but fewer than half know about risk diversification. Almost all older credit card holders pay off their balances in a timely manner, but only 40% hold stocks; fewer than 18% with $1,000+ in assets hold portfolios consistent with age-appropriate investment glide paths. We further show that a one-unit higher financial literacy score is associated with a greater propensity to timely pay off credit card balances (1.5 ppts), to hold stock (8.3 ppts), and to follow an age-appropriate investment glide path (1.7 ppts).

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Financial literacy, household portfolio choice and investment return

Cited by 73 publications

References 29 publications

Consumer financial education and risky financial asset holding in China

Consumer financial education and risky financial asset holding in China

The Impact of Social Knowledge on the Efficiency of the Financial Markets: A Case Study on the Erbil Stock Exchange

Financial Literacy and Financial Decision-Making at Older Ages

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