Impact of Financial Education and Literacy on Investment Behaviour

Abstract

Abstract: Economists are beginning to investigate the causes and consequences of financial illiteracy to better understand why investment and retirement planning is lacking and why so many households arrive close to retirement with little or no wealth. This study reveals that many households are unfamiliar with the most basic financial and economic concepts needed to make saving and investment planning. Such financial illiteracy is widespread: young and older people in many countries appear miserably under-informed about basic financial computations, with serious implications for saving, investment planning, and other financial investment decisions. Governments and several non-profit organizations have undertaken initiatives to enhance financial literacy. This study estimates how financial education affects a person’s financial literacy score, short-term and long-term financial behaviours from collected data. There are three financial education categories: at school level, college level and learning with additional courses. These courses detail has not been studied current literature about financial education. An essential indicator of people’s capability to make financial and investment decisions is their level of financial literacy. Results are found to be robust across different measurements of financial knowledge and behaviour, and the issues were specifically addressed. This study provides a comprehensive insight for policymakers as well as financial individual investors.