Financial Choices Research Articles

What factors influence household financial decisions in Malawi?

PurposeThis study investigates the factors influencing household financial choices in Malawi. The authors also compare how household financial decisions differ in urban and rural areas.Design/methodology/approachThe authors utilize the logit model to examine the factors that influence household financial decisions using the Malawi Integrated Household Survey 2019–20, while Oaxaca–Blinder decomposition is used to estimate the variations in household financial decisions between urban and rural areas.FindingsThe authors find that the likelihood of saving increases with income, secondary and tertiary education, and age. The likelihood of saving also decreases with household size and remittances. Additionally, the authors report that marriage reduces the likelihood of loans, whereas sex, age, and income raise the likelihood of loans. According to this study’s findings, income discrepancies between urban and rural samples account for most observed household financial variations. The authors also find that most of the observed variations in household financial decision-making between urban and rural households are reduced when income equality, participation in agriculture, university education, and household size are considered.Originality/valueUsing data from the Malawi Integrated Household Survey 2019–20, this research analyzes the components that affect household financial decisions. While most studies only look at one component of household finances, this study concurrently addresses debt and savings. The study also evaluates whether changes in the variables between urban and rural households impact those households' financing choices.

The regulatory nexus between the promotion of financial education and financial inclusion in enhancing consumer protection in South Africa

This paper seeks to share some insights on the regulatory aspects of the promotion of financial education and financial inclusion to enhance consumer protection in South Africa. In recent years, policymakers in different countries, including South Africa, have made various efforts to regulate financial inclusion and integrate financial consumers into the financial sector. Similarly, policymakers and other relevant stakeholders have made efforts to promote financial education to empower financial consumers to make sound financial choices and decisions. Notwithstanding these efforts, the promotion of financial education and financial inclusion has been done in isolation, overlooking the policy synergies between these objectives and/or financial sector outcomes in enhancing consumer protection in South Africa. Given the recent COVID-19 pandemic, both financial education and financial inclusion have become increasingly important policy considerations to negotiate the chasm from the challenges that financial consumers faced before the pandemic and move towards safeguarding the economic interests of financial consumers post-pandemic. Accordingly, this paper explores the interrelationship between the effective promotion of financial education and financial inclusion to enhance consumer protection. Moreover, this paper examines the adequacy of the regulation of financial education and financial inclusion under the National Credit Act 34 of 2005 (NCA); the Consumer Protection Act 68 of 2008 (CPA), the Financial Sector Regulation Act 9 of 201 7 (FSR Act) and the proposed Conduct of Financial Institutions Bill (CoFI Bill) in relation to strengthening consumer protection. Put differently, this article focuses on the regulatory nexus of the promotion of financial education and financial inclusion to enhance consumer protection in South Africa. In the end, this article will provide some recommendations and enforcement approaches that could be incorporated into the regulatory framework of the promotion of financial education and financial inclusion to enhance consumer protection in South Africa.

Investigating the reasons behind the choice to promote crop diversification practices through the new CAP reform in Europe

The present study investigates the factors that might contribute influencing Member States decision to promote the adoption of crop diversification practices through their provisional National Strategic Plans for implementing the 2023–2027 Common Agricultural Policy. The Qualitative Comparative Analysis method is used to explore the link between key agricultural land uses and land use pressure indicators and the choice of funding the adoption of diversification practices and of imposing restrictions to access subsidies for their adoption. Results highlight that the choice of financing the adoption of diversification practices is associated with: the diffusion of cereal crops (share of cereals crops on the arable land above the median value of 20%), the diffusion of large farms (share of agricultural land for farms above 100 ha on the UAA above the median value of 10%) and the poor diffusion of grasslands (share of agricultural land cultivated with permanent grassland below the median value of 30%), mainly for eastern European countries, and with biodiversity pressures (share of biodiversity pressure indicators above the median value of 0.36), mainly for central European countries. Conversely, the choice of imposing high restrictions on the adoption of diversification practices is mainly associated with different form of land use pressures (nutrient leaching, biodiversity losses and soil erosion), mainly for southern European countries. Lack of financing and lack of restrictions remains unexplained for some MS (i.e., this is particularly evident for Sweeden and Finalnd) and apparently contradictory choices are highlighted for some others (i.e., financing the adoption of diversification practices with limited restrictions, which was addressed for France, Austria, Slovenia and Lithuania). The paper concludes providing a summary of the main findings, some policy recommendations to cope with existing shortcomings in current plans, due to excess flexibility and lack of coherence with existing priorities and highlighting the limits of the approach used and some proposal for further investigation.

Transcranial stimulation over the medial prefrontal cortex increases money illusion

People often ignore the real value of money and focus on its nominal value, a phenomenon known as money illusion. In the present study, we conduct two transcranial direct current stimulation (tDCS) experiments and test the role of the medial prefrontal cortex (mPFC) in money illusion. We find that anodal stimulation over the mPFC significantly increases money illusion in an evaluative task, and this anodal stimulation effect can be replicated in an incentivized task in the context of financial choices. Our study sheds light on the neural mechanisms underlying the money illusion.

Low interest rates, low productivity, low growth? A multi-sector case study of UK-based firms’ funding and investment strategies in the context of loose monetary policy

ABSTRACT Low productivity growth in a low interest rate environment is a perennial problem for both UK monetary policy and the UK economy more generally. Through a comparative case study of eight firms across two economic sectors during 2012–6 we identify two shortcomings in the current productivity literature. The first is the importance of the order in which firms make investment and funding decisions. Investment decisions tend to predate questions of firm financing, implying loose monetary policy does not drive investment, but rather facilitates it. Secondly, we emphasise the importance of investment quality for funding choices. External financing such as credit or stock issues is predominantly used to fund expansionary but not productivity focussed investments. This implies monetary policy may have worsened the UK’s productivity problem by facilitating expansionary over productivity enhancing investment strategies. Our findings are broadly consistent with the political economy literature on the UK economy, but we argue that research framed by the ‘growth model’ concept has not successfully illuminated firm-level dynamics, and relies on mainstream macroeconomics to explain low productivity. We therefore argue for a research agenda that moves beyond aggregate measures and incorporates questions about the quality of economic activity.

Assessment of Financial Literacy: The Case of Hawkers in Sarawak, Malaysia

The purpose of the study is to assess the financial literacy of hawkers, describe the level of financial behaviour and attitude as well as to assess the level of financial awareness of hawkers in Pasar Tamu Bintulu, Sarawak, Malaysia. The study involves a sample size of 60 participants, who were randomly selected using simple random sampling. Data was collected through a survey questionnaire, which was analyzed using the Statistical Package for Social Sciences (SPSS), with descriptive statistics and crosstabulation are used to interpret the results. The survey results reveal that the financial literacy of hawkers in Pasar Tamu, Bintulu, Sarawak is deficient, with the elderly hawkers displaying lower financial knowledge. The research also observed that individuals with lower educational levels exhibited adverse financial practices. Furthermore, most of the hawkers were unfamiliar with various investment products and failed to utilize them effectively. The study revealed that most of the hawkers lacked financial awareness and had limited knowledge of how to use financial products and services offered in the market. The study's results indicate a requirement to enhance the financial literacy and education of both the surveyed participants and the general population, enabling them to make informed financial choices. The research emphasizes the significance of individuals acquiring adequate knowledge on personal finance, investments, and other financial matters to secure their financial future and avoid making costly errors. The study highlights the necessity for financial institutions, governments, and non-profit organizations to provide easily accessible and effective financial education programs and resources, such as workshops, online courses, and other educational initiatives. By implementing these measures, individuals can develop the skills and knowledge required to manage their finances and achieve their financial objectives. This study may be the first to evaluate the financial literacy of hawkers, as most prior research has focused on the financial literacy of SMEs.

How does blockchain technology affect the strategic financing decisions of platform supply chain with low-carbon product?

PurposeTo explore how the blockchain affects the pricing and financing decisions in a low-carbon platform supply chain.Design/methodology/approachConsidering the dual roles of the e-commerce platform as a seller and an initiator, a typical game-theoretical method is applied to analyze the behavior of supply chain decision-makers and the impact of key variables on equilibriums.FindingsWhen loan interest rates are symmetric, whether blockchain is used or not, the e-commerce platform financing mode will always produce higher wholesale price and unit carbon emission reduction, while the retail price is the opposite. Higher unit additional income brought by the blockchain can bring higher economic and environmental performances, and the e-commerce platform financing mode is superior to bank financing mode. The application of blockchain may cause the manufacturer to change his/her financing choice. For bank financing, with the increase of loan interest rates, the advantages brought by blockchain will gradually disappear, but this situation will not occur under e-commerce platform financing.Originality/valueBlockchain is known for its information transparency properties and its ability to enhance user trust. However, the impacts of applying blockchain in a low-carbon platform supply chain with different financing options are not clear. The authors examine the manufacturer's strategic choices for platform financing and bank financing, whether to adopt blockchain, and the impact of these decisions on carbon emissions reduction, consumer surplus and social welfare. The research conclusion can provide reference for the operation and financing decisions of platform supply chain under the carbon reduction target in the digital economy era.

EXAMINING MACROECONOMIC FACTORS & CAPITAL STRUCTURE CHOICES IN PAKISTAN'S MANUFACTURING INDUSTRY: AN EMPIRICAL ANALYSIS

A company's financing choice is the influenced by both internal and external factors, with empirical research typically focusing more upon internal factors and less upon macroeconomic variables, mainly in emerging countries. This study aims to examine the macroeconomic factors that affect capital structure decisions in manufacturing industry in Pakistan, using data from the past decade (2012-2022). Study uses many models, including POLS, fixed effect, random effect and Hausman test, to analyze impact of macroeconomic factors on capital structure choices of listed manufacturing firms in Pakistan. Results indicate that GDP growth rate, corporate tax, and interest rate have negative link with financial leverage, but exchange rates, stock market development and public debt have a positive association with financial leverage. Study acmes upright of macroeconomic variables in evolving manufacturing sector in Pakistan, about stock market development, corporate taxes, & exchange rates. This study be useful for shareholders in determining proper investment and financing sources, and for financial leaders in determining the optimal level of capital structure.

Effect of Profitability, Investmen Decision, Funding Decision, and Dividend Policy on the Value of Manufacturing Companies Listed on the IDX for the 2018-2020 Period

Purpose: This study’s goal is to ascertain how profitability, investment choices, funding choices, and dividend policy affect corporate value at F&B manufacturing business indexed at the Indonesia inventory trade (IDX) fot the 2018-2020.
 Design/Methodology/Approach: Data gathered using the documentation technique. Purposive sampling was used to sample, and 10 firms were found. Data management used multiple regression methods with the help of SPSS version 26.
 Findings: The results revealed that profitability, investment decision, and dividend policy gave significant impact.
 Implications/Originality/Value: So it is concluded that profitability, investment decision, and dividend policy gave significant impact. The funding decision have no impact on firm value.

Financial Literacy and Retirement Planning Behaviour Among Working Single Women in Private Sector

A lack of financial knowledge causes many to make poor financial decisions, which may result in irrational financial choices and jeopardize their retirement plans. Studies have shown that one in three Malaysians consider themselves to have "low financial knowledge." Furthermore, one in ten people believe that they are financially undisciplined. Studies have shown that 35 percent of men are more financially literate compared to 30 percent of women globally. With the increment level of financial literacy among women, it will be able to minimize the socio-economic gap and inequality that still exists and in addition to achieve the sustainable development goal 2030. This article aims to explore the causes of financial literacy towards retirement planning behaviour among working single women, using theory of planned behavior and OECD’s elements of financial literacy as a bases of discussion. This study applied a qualitative approach through 5 interview sessions with working single women. Data were collected through semi-structured interviews and were then interpreted using thematic analysis. The findings of this study revealed that the elements of financial future, debt free motivation, financial shocks and financial socialization agent describe the causes that contributed to the financial literacy behavior towards retirement planning among working single women.

A Study on the Relationship Between Capital Structure and Value of Retail Industry --Taking Amazon as an Example

The outbreak of COVID-19 has driven a change in the residents' consumption structure, prompting further transformation and upgrading of the retail industry and intensifying market competition within the industry. The transformation and upgrading of the retail industry require financial support. When business directions change and business forms are adjusted, financing channels and financing methods need to be expanded to ensure that the company can cope well with the tight capital situation when faced with high-quality financing decisions. The capital structure and financing choices made by the company have a direct bearing on the company's future development and fate in the current state of the online retail business. Additionally, making financial decisions is at the heart of business management. Businesses should pick advantageous financing options to lower borrowing costs. At the same time, the enterprise also should establish effective internal financial controls to lay the financial foundation for the future sustainable development of the enterprise. To improve the enterprise value of the online retail industry as well as the enterprise's ability to withstand risks and enhance its competitiveness, this paper examines the relationship between Amazon's asset structure and enterprise value and makes relevant recommendations to it.

Factors Affecting Funding Choices of Entrepreneurs in India: An Analytical Study

Funding Choices of Entrepreneurs in India encompass a multitude of variables that shape the decisions made by entrepreneurs in securing financial resources for their ventures. These factors include the availability and accessibility of formal financing options, such as loans and investment capital, as well as the challenges related to collateral requirements and the stringent criteria imposed by financial institutions. Limited awareness and understanding of financing alternatives among entrepreneurs also contribute to their funding choices. Moreover, the competitive landscape and market conditions exert a profound influence on funding decisions, with the presence of unanticipated competition, market volatility, and the need for rapid growth and innovation leading entrepreneurs to seek funding from unconventional sources or adopt bootstrapping strategies. Understanding these factors is crucial for entrepreneurs, policymakers, and financial institutions to develop initiatives that enhance the accessibility of formal financing, promote financial literacy and entrepreneurial education, and foster a supportive ecosystem for entrepreneurs to thrive. Financial institutions can tailor their offerings to meet the unique needs of entrepreneurs, while policymakers can implement measures to create an enabling environment for entrepreneurial finance. By comprehending these factors, stakeholders can effectively address the funding challenges faced by entrepreneurs in India and facilitate their entrepreneurial endeavors for sustainable economic growth and innovation.

Pricing of project finance bonds: A comparative analysis of primary market spreads

This paper provides a comparative analysis of project finance (PF) and traditional corporate finance (CF) bond spreads and pricing. Using a cross-section of 47,196 bonds issued worldwide in the 1993–2020 period, we show that PF and CF bonds are differently priced, PF bonds have higher spreads than comparable CF bonds, and although ratings are the most important pricing determinant for PF and CF bonds at issuance, investors rely on other contractual, macroeconomic, and firms' characteristics beyond these ratings. Our results do not support the hypothesis of PF transactions as mechanisms of reducing sponsoring firms' funding costs: the cost of borrowing affects financing choices and PF transactions' weighted average spread is higher than that of comparable CF bond deals. We also find that economies of scale, risk management, and information asymmetry arguments affect sponsoring firms' choice between PF and CF transactions.

Understanding Consumer Attitudes towards Sustainable Investments: A Qualitative Exploration

Sustainable investments, which integrate environmental, social, and governance (ESG) factors into investment decisions, are becoming increasingly popular as consumers become more conscious of the ethical impact of their financial choices. This study explores consumer attitudes toward sustainable investments, focusing on the key drivers, perceptions, and barriers that influence their decision-making process. Through a qualitative analysis based on interviews and case studies, the research uncovers how consumers balance financial returns with ethical considerations and the role of trust, transparency, and knowledge in shaping these attitudes. The study also provides insights into how investment firms can better cater to the growing demand for sustainable investment options.

Financing decision of heavy pollution enterprises under green credit policy: Based on the perspective of signal transmission and supply chain transmission

More and more countries have successively promulgated various environmental policies to mitigate climate change and environmental pollution. These policies have become important in promoting low-carbon development and green transformation through enterprise financing. This study employs a difference-in-difference (DID) model to examine how a green credit policy affects the financing choices of highly polluting businesses using the data of A-share listed corporations from 2009 to 2021. The research finds that: (1) The number of bank loans has significantly decreased for highly polluting companies; a green credit policy will also reduce the scale of any non-bank loans. (2) The extent of equity financing and bond financing of highly polluting firms on the capital market decreased due to market constraints and the function of policy signaling. (3) The impact of a green credit policy will spread to upstream and downstream enterprises through trade credit, thus reducing enterprises’ commercial credit scale. (4) The impact of a green credit policy on bank loans is more significant in state-owned enterprises, in regions with a high degree of marketization, and in regions with low intensity environmental regulation. The research results provide targeted policy recommendations for promoting the development of green credit and achieving carbon neutralization.

Impact Of dividend decision on the market capitalization of the firm: Evidence from Indian large cap companies

The percentage of the profit distributed to the shareholders is known as the dividend. The decision at hand is how much of the company's profit should be divided to the shareholders after taxes have been paid. It also contains the portion of the profit that needs to be invested back into the company. The retained earnings boost the company's potential for future earnings when the present income is reinvested. The amount of retained earnings has an impact on the company's choice of financing as well. The decision to declare a dividend should be made with the goal of maximizing shareholder value in mind. The present study attempted to evaluate the impact of dividend decision on the market capitalization using regression model. The regression analysis model revealed the significant impact of the independent variable on the market price of the share as well as the dividend policy determinants on the subsequent market price variable.

A Comparison between Venture Capitalists and Angel Investors in the Startup Funding

In 2021, many start-up companies raised a large amount of development funds, and many technology companies even listed at relatively high valuations. However, according to data analysis released by Crunchbase, venture capital in the global market will reach 445 billion dollars in 2022, a year-on-year decrease of 35% from 681 billion dollars in 2021. It is against this backdrop of slowing investment growth that this paper is written. The paper mainly analyzes the operation process and advantages and disadvantages of the two early financing methods of venture capital and angel investment, and on this basis summarizes how startups should choose the financing method that suits them. Each financing method has its own advantages and disadvantages. For start-ups seeking funding for development, they need to make the right financing choice depends on the ultimate goal of the company's development and adjusting the financing strategy according to the specific needs of different industries.

Behavioral Patterns That Influence the Financing Choice Models of Small Enterprises in Ecuador through Latent Class Analysis

The presence of small enterprises in developing countries makes new information on these enterprises substantially valuable for these countries. Governments have put forward numerous action plans and public policies to improve access to external credit. However, despite all technological advances, there are still situations linked to the theory of asymmetric information between lenders and borrowers, which influences the granting of financing. Under this premise, the present research uses latent classes to analyze the financing decision behavior patterns of 1033 business owners who faced the financing process and the constraints faced by lenders based on the asymmetric information theory. The results allowed the construction of a model that identified five profiles of trust in financial institutions among entrepreneurs that affected their financing decisions.

ROBO-ADVICE: AN EFFECTIVE TOOL TO REDUCE INEQUALITIES?

When it comes to financial choices, households face complex decisions. Choosing how much to save or consume out of a monthly income in a way that is optimal over working life and retirement is the fundamental issue in personal finance. This decision has significant repercussions on a household’s well-being and the well-being of their offspring because even slight differences in monthly saving rates can amount to substantial variation in long-term wealth accumulation. But the choice of how much to consume and save at each point in time is only the first of a series of intertwined decisions households face. For instance, households also need to decide whether they should invest their savings in stocks, bonds, housing, or other assets, all of which have very different risk-return profiles. Also, households need to choose how to finance their consumption, especially for durable goods such as cars, housing, or academic degrees. Financing choices have enormous consequences on financial and mental well-being, especially for individuals at the beginning of their careers and with lower-paying jobs who face the challenge of attempting to reduce their student and credit-card debt balances. Virtually every household around the globe faces these personal finance decisions on a daily basis, but very few of them are equipped to understand the trade-offs and make sound choices. Historically, human financial advisors and financial planners have provided support. However, due to the opportunity cost of time, financial advisors find it economically profitable to cater to wealthy individuals, who paradoxically are better equipped to make these decisions relative to vulnerable households in the first place. Differential access to financial advice has likely contributed to the growing wealth inequality documented in the U.S. and abroad over the last few decades. How can we ensure that sound financial advice is available to all households, especially the most vulnerable ones? Over the past decade, we have experienced a revolution in personal finance with the introduction of robo-advisors embedded in financial technology (fintech) applications (apps). Robo-advisors collect and analyze large amounts of transactional data and provide individuals with suggestions on how to improve their choices. Depending on the soundness and appropriateness of the algorithms they employ, robo-advisors have the potential to improve households’ decision making considerably. In what follows, we describe the nature and scope of robo-advisors in financial decision making and discuss a few examples of robo-advice designs that have delivered mixed success. Finally, we discuss some of the most critical policy debates around robo-advisors.

현금부족이 외부자본 조달 결정에 미치는 영향

Purpose - Based on the funding-horizon theory, this study aims to test the effects of cash needs and the persistence of external funding needs on firms' external financing.
 Design/methodology/approach - Financial data of Korean listed companies were collected from DataGuide. Immediate and near-term cash shortfalls are defined using the methodology of Haung and Ritter (2021). We estimate multinomial logit regressions for the financing choice.
 Findings - First, all three cash depletion variables used in our study increase the likelihood of external financing. Second, firms prefer to issue debt to meet immediate spending and equity to meet long-lived cash needs. Third, this effect is more pronounced for high R&D firms. Fourth, chaebol firms with internal capital markets defer raising external capital for immediate and near-term cash needs.
 Research implications or Originality - This paper provide empirical evidence that immediate and near-term cash needs induce external financing, and the persistence of cash needs affects the choice between debt and equity, the finding which is consistent with the funding-horizon theory of financing decisions. Being the first paper to test the funding-horizon theory using Korean data, this paper contributes to the literature on the capital structure of Korean firms.