Academic community's investment decision in sharia stock market: The impact of financial literacy

PurposeChina's New Rural Pension Program (NRPP) has been implemented for a decade, but the factors that facilitate rural residents' participation have received little attention. This study aims to investigate whether financial literacy has an influence on rural residents' behavior of participation in the NRPP. In particular, this study further verifies if high financial literacy is important and whether financial education can enhance the impact of financial literacy on current, long-term and dynamic pension decisions of rural households.Design/methodology/approachThis study investigates the impact of financial literacy on rural residents' participation in China's NRPP using the China Household Financial Survey (CHFS) Data of 2015 and 2017. This study constructs an analytical framework for current, long-term and dynamic impacts and comprehensively analyzes the value of financial literacy in the decision making of the NRPP. This study uses the instrumental variable method to solve the possible endogeneity problem. In addition, the authors also demonstrate the positive role of high financial literacy in household pension decisions. Further analysis reveals gender and regional heterogeneity in the impact of financial literacy on pension decisions. The moderating effect model explores whether financial education has a significant moderating effect on financial literacy and pension decision making of the NRPP.FindingsFinancial literacy can improve the participation behavior of households in rural areas (dynamic effect) and promote their current and long-term participation in the NRPP, choosing a higher pension contribution level in the NRPP. However, financial literacy has no significant effect on the change in the contribution amount of the NRPP. Further research finds that high financial literacy has comparative advantages in household pension decision making in rural areas. There are gender and regional differences in the impact of financial literacy on pension decisions. In addition, effective financial literacy education enhances the current, long-term and dynamic impacts of residents' financial literacy on NRPP participation and pension contributions.Practical implicationsThis study comprehensively considers the impact of financial literacy on pension decision making behavior from three aspects: current, long-term and dynamic, making up for the dearth in the existing literature that only focuses on the impact of financial literacy on current financial behaviors and bridging the gap between the theoretical framework and experimental results. Our study proposes new policy implications: (1) Governments and financial institutions should pay attention to financial literacy and education levels in rural areas and carry out financial education and training programs to increase social welfare levels by increasing rural residents' participation and pension contribution. (2) The community can strengthen the policy advocacy of the NRPP and make people develop a stronger sense of trust toward it. The government can also subsidize individual accounts through financial support.Originality/valueThis study comprehensively considers the impact of financial literacy on pension decision-making behavior from three aspects: current, long-term and dynamic, making up for the dearth in the existing literature that only focuses on the impact of financial literacy on current financial behaviors and bridging the gap between the theoretical framework and experimental results. Our study proposes new policy implications: (1) Governments and financial institutions should pay attention to financial literacy and education levels in rural areas and carry out financial education and training programs to increase social welfare levels by increasing rural residents' participation and pension contribution. (2) The community can strengthen the policy advocacy of the NRPP and make people develop a stronger sense of trust toward it. The government can also subsidize individual accounts through financial support.

Financial knowledge is empowering the new generation of the 21st century in the era of transformative marketing (Kumar, 2018), which leads to the well-planned financial structure for long terms. However, it is imperative to know that on what scales they are managing their budgets. Understanding the impact of selfcontrol, financial literacy, and financial behavior is very vital for living a successful life (Sarstedt et al., 2017). The literature shows, people with good self-control and financial literacy tend to behave well compared to people with less self-control and financial literacy. This study examines the relationship between self-control financial literacy, financial behavior and financial wellbeing. A survey was conducted on 416 people from educational institutions, corporate sectors and food courts in Pakistan to empirically examine the impact of self-control and financial literacy on financial behavior and financial well-being of people. Better self-control and financial literacy lead to greater financial well-being. This research paper concludes that self-control and financial literacy affect financial well-being through financial behavior. Financial literacy has a significant direct impact on financial wellbeing, however the direct impact of self-control on financial well-being is insignificant. Impact of financial behavior on financial well-being is stronger than the impacts of financial literacy and self-control on financial well-being. This paper will be useful for economists and companies in Pakistan to better understand consumer market and to make decisions accordingly.

PurposeWhat is the impact of financial literacy on the lending activity of banks? Based on the results of the S&P Global FinLit Survey for an extensive sample of countries, this paper aims to provide the first global test for the impact of country-level financial literacy on the lending activity of commercial banks.Design/methodology/approachThe authors use data on financial literacy by country from the S&P Global FinLit Survey that was completed in 2014 and lending activity and macroeconomic control variables data from the World Bank from 2015 to 2017 to estimate the cross-sectional effect of financial literacy on the importance of loans and of non-performing loans, using different estimation methods.FindingsThe results show that, first, financial literacy favors lending activity, contributing to enhance the importance of credit in the economy. Second, financial literacy prevents bad loans from building up, thus reducing credit risk and favoring the quality of the credit portfolio of banks. These results are robust to several controls for macroeconomic conditions and the quality of institutions. They are also robust to different estimation methods.Research limitations/implicationsThe evidence of the positive (negative) impact of population financial literacy on the quantity (poor quality) of loans suggests that the efforts to enhance the financial literacy of the population contribute to the sustainable development of the financial sector and economic growth.Originality/valueThe paper extends to an international and country-level the available evidence of the consequences of the existence (or lack of) of financial literacy for the lending activity of commercial banks, focusing on the amount of credit granted and the quality of such credit. Thus, the paper provides an exploratory analysis of the impact of country-level financial literacy on the lending activities of commercial banks.

This study examines how financial literacy affects the saving habits of older people in Hanoi, Vietnam and the impact of digital financial literacy in mediating this relationship. The research is based on data collected from 250 participants aged 55 and above, surveyed in April 2024. The Partial Least Squares Structural Equation Modeling (PLS-SEM) method with SmartPLS 4 software estimates the relationship among variables. The study confirms a positive correlation between financial literacy and the saving behavior of elderly people. Additionally, digital financial literacy plays a positive mediating role in enhancing the effect of financial literacy on saving behavior by facilitating elderly people's utilization of digital tools for financial management and the pursuit of more effective saving strategies. However, traditional financial literacy maintains a more significant and direct impact on the saving behavior of this demographic group. These findings have practical implications for developing policies and interventions to enhance financial literacy and digital skills among the elderly, ensuring financial security and fostering saving behavior. The results underscore the importance of targeted educational initiatives that address both traditional financial literacy and digital financial competencies for elderly people, potentially leading to improved financial outcomes in this demographic group.

Financial literacy is essential for every individual concerned with public welfare and household portfolio choices. In this study, we investigate the impact of household financial literacy on individuals’ financial behavior using the China Household Financial Survey Data (CHFS) of 2015 and 2017. The results show that financial knowledge has significant current, long-term, and dynamic effects on financial behavior. This finding suggests that financial literacy is an important factor in shaping and improving financial behavior. Second, financial literacy can improve residents’ limited attention, and residents with high attention tend to have formal bank accounts, participate in the stock market, and engage in financial behaviors in situations such as risky financial markets. High attention also helps to improve residents’ financial behavior. This relationship suggests that financial literacy positively impacts formal bank account holding, participation in financial markets, participation in commercial insurance, participation in pension plans, and credit card holdings through limited attention channels that facilitate access to specific financial information. In addition, heterogeneity analysis showed that the impact of financial literacy on financial behavior differs significantly between urban and rural households, between men and women, and between high and low education levels. The study provides valuable insights for policy implications to enhance financial literacy, such as carrying out financial training to improve residents’ knowledge about financial aspects, which further helps to optimize household financial decision-making.

One of the national agendas in Indonesia is delivering financial literacy towards its society. This movement was in response to a report that Indonesia was ranked as a country with the lowest financial literacy lever among other countries in the Asia-Pacific region. This study aims to investigate the impact of attitude, subjective norm, and financial literacy on saving intention and behaviour among teacher students in a public university in Jakarta, Indonesia. Teacher students are pre-service teachers who could promote financial literacy at schools in the future. Data was collected using an online survey. In total, there were 212 usable instruments and data was analysed using exploratory and confirmatory factor analysis. As a result, two hypotheses were rejected: financial literacy was insignificant to influence attitude towards saving and saving intention. Other results, financial literacy and saving intention significantly influenced saving behaviour. In addition, attitude and subjective norm significantly influenced saving intention. Implication for practice and future research are discussed. DOI: 10.5901/mjss.2016.v7n6p41

Researcher has followed a widespread approach for explain the relationship between financial literacy, risk tolerance and investment decision. Recently there has been increasing interest in studying the behaviors of investors and the factors which affecting the investment decisions of investors due to a synchronized approached followed by a large number of investors. A Study has been shown that a large number of investors look after the safety of their money not higher return.[1] Investment decision is a crucial decision which is influenced by various factors as financial literacy, income level, financial soundness and various other demographic and sociological factors. The choice of investment alternative of is broadly depends upon the risk tolerance level of investors.[2] On the basis of certain conclusion, cover from precious research, the researcher in this study defines the relationship between financial literacy, risk tolerance and financial decision making of investors through exploratory research tools. For explaining this relationship researcher gives a mediation model. By using this mediation model a direct relationship between Financial Literacy and Risk Tolerance and between Financial Literacy and Investment Decision via Risk Tolerance, can be explored.

Financial literacy and overconfidence are important investment considerations due to market complexity. This study examines how Financial Literacy, Overconfidence, Risk Tolerance, and Gender affect investment decisions in Bandung generation Z investors. This study uses a descriptive quantitative methodology to survey 121 Generation Z investors via questionnaire. SEM- PLS provides further evidence that financial literacy positively affects risk tolerance at a 5% significance level. At 5% significance, financial literacy positively affects investing decisions. Risk tolerance also positively affects investing decisions at a 10% significance level. Additionally, there is evidence that the impact of financial literacy on investment decisions is mediated by risk tolerance, with a significance level of 10%. Gender positively influences financial literacy and risk tolerance, with a 5% significance level. In addition, a significance level of 5% indicates that overconfidence has a substantial and advantageous effect on risk tolerance. With a 5% significance threshold, overconfidence positively affects investing decisions. Overconfidence and investing decisions are mediated by risk tolerance at 10%. Lastly, gender moderate overconfidence's effect on risk tolerance with a 5% significance threshold. For overconfidence, gender has minimal impact. The complete analytical framework of this study combines financial knowledge, overconfidence, risk tolerance, and gender to explain individual investing decisions. This study seeks to help investors, particularly generation Z, make more logical and successful investment decisions by improving their financial literacy, regulating their overconfidence, and considering risk tolerance and gender.

Aim of the Study: Financial inclusion allows individuals to access financial products and services that help in reducing poverty and encourage economic growth. The aim of this study is to examine the impact of social network, institutional framework and financial literacy on financial inclusion. Methodology: Current study is based on cross-sectional quantitative research design. This study has employed a sample of 300 lower middle income group household heads residing in District Rawalpindi. Quantitative data has been analyzed through assessment of measurement model and structural model using SMART PLS. Findings & Implications: The findings of this study found that institutional framework, social network and financial literacy have significant impact on financial inclusion. The results of this study provide insights and implications of financial inclusion for policy makers and regulatory bodies.

Financial literacy has become a major area of research in recent years, both in the investment and retirement literature with respect to the increasing complexity of financial products and need to save for retirement. Studies generally find individuals are financially uninformed and lacking in basic financial principles. This study discusses in depth research with detailed analyses of financial literacy, financial education, individual investment outcomes, genetic investment biases, and related issues.A vast literature concerning investor financial literacy and education exists. The SEC’s [2012] study mandated under the Dodd-Frank Act provides a recent overall review and highlights existing levels of retail investor financial literacy and preferences for formats and timing of intermediary disclosures prior to making investment decisions, and more.Lusardi and Mitchell [2013] assess research on financial literacy. Topics include theoretical research that casts financial literacy as an investment in human capital, how much financial knowledge individuals and groups have, the impact of financial literacy on financial decision-making, and what yet remains to be learned. Fernandes, Lynch, and Netemeyer [2014] review research on financial literacy, financial education, and consumer financial outcomes. Meta-analysis is performed on financial literacy and financial education relationships in 201 non-redundant studies. Interventions to improve financial literacy explain only 0.10% of variance in financial behaviors.Glaser and Walther [2014] combine psychology research with empirical findings on the usefulness of financial literacy for investment decisions. The personal behavior of individuals with high levels of financial literacy may depend on the prevalence of two styles of thinking in dual-process theories: intuition and cognition. Collins [2012] finds the lack of financial literacy can reduce ability of individuals to make informed financial decisions. But, financial advice has the potential to substitute for lack of ability in financial decision-making. However, advice more often complements financial capability for individuals with higher levels of income, education, and financial literacy.

This study aims to establish the impact of financial literacy on investment decision-making in developing countries, with the Republic of Kazakhstan serving as a case study. The research approach involved conducting a questionnaire survey for Kazakhstan residents to evaluate their level of financial literacy, followed by analysis of the results through the SPSS software. To evaluate the influence of financial literacy on the efficiency of investment decision-making, a correlation analysis was performed on two variables: the financial literacy index and the investment decision-making efficiency index. The findings indicate that respondents' financial literacy level has an impact on investment decision-making. After all, a higher level of financial literacy indicates a larger number of individuals who have made financial investments at least once, while among respondents with a lower level of financial literacy, approximately 30% did not invest at all. The impact of financial literacy on effective investment decision-making is dependent on age, education, and financial criteria. Moreover, personal income plays a pivotal role in facilitating informed investing choices. The proposed study has practical applications for financial and credit institutions, banks, and government officials in establishing a basis for efficiently injecting finances into the economy of a developing nation.

Small and medium enterprises (SMEs) can be recognized as a main role player in a country’s economy. This study mainly focuses on identifying a few factors that could lead to identifying a viable business strategy for SMEs in Colombo District, Sri Lanka. As a developing country, Sri Lanka needs to have lucrative business potential and sustainability of the business. It has been identified that financial literacy (FL) plays a crucial role in enhancing business performance, and enterprise risk management (ERM) is considered to be another important factor in the betterment of business performance. Therefore, in this deep study, it was mainly hypothesized that higher FL leads to the high performance of SMEs in Sri Lanka. Same time, ERM was formed to mediate the relationship between FL and SME performance. FL found three constructs which are Financial Knowledge (FK), Financial Behavior (FB) and Financial Attitude (FA), and ERM following the same decomposed into three constructs, namely Identification of Risk (IR), Facing Uncertainties (FU) and Risk Reaction (RR). Results confirmed that there is a positive and direct relationship between FL and SME performance and ERM has a mediate relationship between FL and SME performance.

The purpose of this paper is to assess the financial literacy and financial knowledge of the individual and professional investors who invest in the local market. In additions, it examines the relationship between financial literacy, financial knowledge and the influence of risk perception that effect investment decision. The survey was conducted on different investors of Rawalpindi and Islamabad. Data was collected from 257 personnel using adopted questionnaires consisting of measuring each variable on five point likert scale. For data analysis statistical tools such as correlation and regression were tested using SPSS. Result indicates that there is significant positive relationship between financial literacy, financial knowledge, risk perception and investment decision. However, the demographic factors such as gender and age are negatively associated with to investment decision. The current study is considered the first of its kind conducted in Pakistan. To the best of my knowledge, no such studies have been conducting regarding measuring financial literacy, financial knowledge and risk perception or the relationship between financial literacy, financial knowledge level and risk perception that influence investment decisions.

Overconfidence and Investment Decision are very important instruments for individuals, especially investors in the capital market. Overconfidence is the first step if an individual wants to invest, because every investment instrument carries risks. If they have a confident attitude, they will dare to take risks. Investment decisions are very important in investment instruments. Individuals must be able to analyze portfolios by properly weighing risk and return. Overtrust and investment decisions must be determined by financial literacy, because if financial literacy is low, investors can become entangled in illegal investments. The purpose of this study is to empirically prove the effect of financial literacy on overconfidence and investment decisions. The sampling technique in this study used purposive sampling. Test the quality of the data used, namely test the validity and reliability test, test the model and test the hypothesis using multiple linear regression analysis. The results showed that the financial literacy variable had a positive and significant effect on overconfidence and investment decisions

The digitation of financial services is changing the way people participate in the financial markets as well as their daily lives. Automated technology in the online investment platforms have made it easier for people, especially Generation Z to invest because this feature aims to create an easier way to access the investment process by integrating financial services into investment selections. This research will focus on the relation between financial literacy and investment decisions. This study will measure how impactful is financial literacy in people’s decision on investment. The population of this research is the members of Generation Z, people who were born in 1997 to 2021, and are fulfilling the requirements to do an investment, that specifically live in Bandung, Indonesia. Online questionnaires were conducted and there were more than 200 respondents who participated in this research. Quantitative method was used to analyse the data collected. The relationship between financial literacy and investment decision was analysed using linear regression with SPSS software. The result showed that financial literacy affected people’s investment decisions. Hopefully this research can give some guidance for people who are experts in the financial sector and can spread more awareness regarding the importance of financial literacy.