Social Influence and Saving Behavior among Micro and Small Enterprise Owners in Kampala, Uganda: A Moderated Mediation Model of Financial Literacy and Self-Control

Abstract

This research uses cross-sectional data from 430 micro and small enterprise owners in Kampala, Uganda, to examine the indirect effect of financial literacy on the relationship between social influence and savings behavior. In addition, the study examines the moderating effect of self-control on the relationship between financial literacy and savings behavior, in addition to its moderating role in the relationship between social influence and saving behavior. Finally, it studies the moderating effect of self on the indirect effect of financial literacy on the relationship between social influence and saving behavior. The study is motivated by social cognitive and social capital theories. For the analysis of data, Process Macro is used. Results show that social influence significantly predicts savings behavior, and financial literacy partially mediates by this relationship. Furthermore, self-control moderates the relationship between social influence and savings behavior and also the relationship between financial literacy and savings behavior. Lastly, self-control has a conditional impact on the indirect relationship between social influence and savings actions through financial literacy. Such results add new knowledge to literature and theory.

Antecedents of Risky Financial Investment Intention among Higher Education Students: A Mediating Moderating Model Using Structural Equation Modeling

“…Social influence includes a change in individual emotions, opinions or behavior caused by those in the external environment [63]. Social influence, i.e., friends, university professors, friends and family, can influence an individual's behaviors and principles, and, consequently, might impact the individual's intention and decisions to invest [26]. Student parents are crucial in forming and guiding their children to be financially literate [27]; thus, families play an important role for their children concerning education and inspiration regarding investment behaviors, such as saving and spending.…”

“…Investment awareness leads individuals to gain the knowledge and skills required to make financial decisions [70]. Thus, students can raise their level of investment awareness through many sources, such as peers, parents, friends, social channels and their network members, which can affect their intention to invest [26,71,72]. Weber and Milliman [73] indicated that students with more financial awareness have higher intentions toward investment.…”

“…Certainly, adults and children gain financial abilities in their families through multiple socialization practices, such as observing their parents' financial behavior [12]. Social influence, such as family, peers and university professors, may shape an individual's behaviors and principles; hence, it affects the individual's decisions [26]. Parents have a crucial role in guiding and encouraging their children toward financial literacy [27]; thus, families are considered a key source of motivation for their children regarding financial knowledge and habits, such as saving.…”

“…Alshebami and Aldhyani [24] asserted that it is essential to have self-control in order to maximize the advantages of investment awareness. Self-control is considered a crucial factor in forming a person's behavior [30], because self-control helps improve and focus one's thoughts, attitude and actions regarding achieving a particular goal [26]. Students with low self-control levels have frequent income-related challenges, inadequate retirement planning and use credit more regularly, exposing themselves to extra financial dangers [31,32].…”

Age, Education and Income Levels As Demographic Determinants of Retirement Planning of Public Health Sector Employees in Ngororero District, Rwanda

“…This theory is more relevant to demographic variables and retirement planning particularly for public health sector employees, as they most participate in the learning process from their families, peers, community, society and institutions. The theory asserts that the behavior of a person is influenced by interaction between observations of other people, the environment, one's own behavior and one's intellectual capability (Mpaata, Saina & Koskei, 2021). Most of the retirement planning decisions can be attributed to learning process which can be formal or informal.…”