Financial Decisions Research Articles

The Influence of Financial Well-Being on Happiness and Financial Decision Making in Indonesia

Previous studies have investigated the effect of financial well-being on happiness, and emotions on financial decision making, but there were not many that have combined both. This research aims to reveal the effect of financial well-being on happiness, and the effect of happiness on financial decision-making among Indonesians. Source of financial well-being, province, and gender are included as moderating variables to the relationship between financial well-being and happiness. The analysis examined primary data from a sample of 152 respondents across the country with PLS-SEM and secondary data from World Happiness Report, GDP/capita, amount of saving in general bank and retirement saving for Indonesians with regression. Based on analysis on the primary and secondary data, financial well-being has positive correlation with happiness, and happiness has positive correlation with financial decisions. However, based on analysis from the primary data, there are no effect from all moderating variables. This research adds to the literature of financial well-being, happiness, and financial decision making, and its findings also provide opportunities for future research within the fields.

Managers’ Perception of Financial Innovations in Turkey

Innovation is often considered a key contributor to firms’ competitiveness. However, its success largely depends on manager’s willingness to accept an innovation. The purpose of this study is to examine managers’ perceptions on financial innovation and the factors that influence their adoption decisions. Using the Technology Acceptance Model (TAM), the study analyzes data collected from a sample of 500 firms in Turkey. The findings show that managers are more likely to adopt financial innovations that are perceived to be easy to use and accessible. Gender, age and level of education are observed to have significant impact on managers’ perception. For example, female managers are likely to be risk averse when making financial innovation decisions than male managers. Younger managers tend to test the innovation before fully implementing it and are more concerned about accountability for the success or failure of the innovation. The results also indicate that accessibility, ease of use, risk and accountability are crucial factors influencing managers' perception on financial innovations. Finally, this research contributes to the literature on financial innovation and provides valuable insights for managers in Turkey to make informed financial innovation decisions. Received: 10 August 2024 / Accepted: 31 October 2024 / Published: 05 November 2024

Analysis of the Application of Accounting Science to Family Life to Avoid Debt and Loans

In household life, it is required to manage household finances carefully, so that finances are controlled and avoid unwanted things such as debt and loans. The purpose of this study is to show how the application and role of accounting in the household consists of four aspects, namely budgeting, planning, recording and decision-making to prevent debt and online loans. The method in this study is descriptive analysis through a phenomenological paradigm. Data collection techniques through observation, interviews and documentation. The informants in this study were 10 housewives with a minimum diploma background in economics. The results of the study show that housewives carry out household financial planning by dividing the current needs that have been planned at the beginning of the month. The media used for financial records is a notebook or journal book that is written simply. Financial decision-making is carried out with the husband. The role of accounting in the household helps informants to plan household finances so that they can control household finances wisely.

Financial Literacy in India

The Financial literacy is very important and plays a crucial role in individuals economic well-being and overall societal development. Financial Literacy is also important to learn money management. This research paper aims to provide a comprehensive analysis and information of the current state of financial literacy in India. This paper explores various terms and factors which influencing financial literacy levels, such as education, income, money management. It covers the why India need financial literacy into different areas. This research paper investigates the critical role of financial literacy in India. By examining the current state of financial literacy among Indian citizens, the study explores its impact on personal finance decisions, economic well-being, and overall quality of life. The paper analyzes the factors influencing financial literacy levels, including education, income, and access to financial services. Furthermore, it discusses the challenges and opportunities in promoting financial literacy in India and proposes recommendations for policymakers, educators, and financial institutions to enhance financial education

Promoter Ownership and Leverage: An Empirical Evidence of Agency Problem in Select FMCG Companies

The study examines the association between promoter ownership and leverage of Fast Moving Consumer Goods (FMCG) companies listed at BSE in the ‘A’ category. The FMCG Industry is a vital sector for the Indian economy. Leverage decision is a critical financial decision. In the year, 2020 the revenue of the FMCG market was USD 110 billion. The study tries to investigate the impact of promoter shareholding on the leverage decision of Indian FMCG companies. The study is conducted on a sample of 46 companies and the study period ranges from 2017-2022 for 5 years. The study conducted A panel data model is opted for data analysis. The study also conducted a diagnostic test to further check the reliability of the data. The study indicated a significant positive association between ownership structure and leverage. Due to the existence of agency problems, the leverage decisions deviate from neoclassical models. The study’s finding adds to the extant literature on promoter ownership. The positive relationship indicated the existence of an agency problem. Firm executives should try to reduce Agency problems to enhance firm performance.

Financial Literacy Program in Introducing Online Loan Applications to University Students

The Covid-19 pandemic in 2021 impacted the increasing diversity of basic needs in society and accelerated digitalization, which has now become a lifestyle. Easy access to digital platforms for shopping, education, investment, payments, and loans has made wise financial management essential. According to data from the Financial Services Authority (OJK), the total distribution of online loans from Fintech Lending in Indonesia reached IDR 225.55 trillion in 2022, an increase of 44.6% from the previous year. Fintech simplifies loan access through peer-to-peer (P2P) lending products that are fast and without complicated requirements, attracting the interest of young generations. Therefore, financial literacy is crucial for Sampoerna University students to address the low level of financial understanding amid the proliferation of online loan applications. Knowledge of risk management is needed so that students can make wise and responsible financial decisions and manage their finances effectively.

The Economics of Capital Allocation in Firms: Evidence from Internal Capital Markets

We analyze a unique chief financial officer (CFO) survey data set to examine capital allocation in firms. Top management is aware of agency and information problems at the divisional level and organizes the budgeting process to counteract managerial opportunism, employing systems of interconnected measures, including layers of approval, divisional budgets, reporting requirements, and compensation schemes. When making funding decisions, top management relies heavily on top-level nonfinancial information, such as the assessment of divisional managers’ abilities. However, substantial parts of the capital budget do not require top management approval as firms trade off the benefits and costs of decentralization, thereby deviating from the traditional paradigm of decentralized project initiation but centralized project approval. Even firms with active internal capital markets tilt capital allocation toward relatively even distributions, reflecting the use of capital allocation as a credible communication device. We also find that within-firm agency problems may result in capital rationing, that is, divisions’ restricted access to internal capital. CFOs also believe that integrating multiple businesses into an internal capital market results in tangible financial benefits, predominantly lower costs of capital and higher debt capacities. Thus, our findings also support coinsurance arguments suggesting that internal capital markets may improve access to external financing. This paper was accepted by Victoria Ivashina, finance. Funding: This work was supported by the BBBank Karlsruhe, Wissenschaftsförderung der Sparkassen-Finanzgruppe, and Karlsruher Institut für Technologie (Karlsruhe House of Young Scientists). Publishing fees were supported by the “Funding Programme Open Access Publishing” of the University of Hohenheim. Supplemental Material: The online appendices and data files are available at https://doi.org/10.1287/mnsc.2021.02755 .

Analysis of fiscal sustainability and its impact on enhancing economic growth in Iraq for the period (2004-2021)

The research aims to analyze and measure the reality of the Iraqi economy for the period (2004-2021)by applying the concept of financial sustainability and its indicators on economic growth. The paper's problem lies in the weak implementation of financial sustainability and indicators in most financial decisions in Iraq, negatively impacting economic growth in most economic sectors in Iraq. The paper started from the hypothesis that the weak implementation of financial sustainability in most of Iraq has contributed to the weakness of economic growth. The validity of the hypothesis has been proven using a standard model known as the Multiple Regression Model (ARDL), the study has yielded several results, the most important being the inverse relationship between the budget deficit as an independent variable and economic growth as a dependent variable. The budget deficit reached (59%) of the "gross domestic Product" indicating a deviation from the 3% deficit defined by the Maastricht treaty to ensure deficit coverage. Iraq's deviation from this percentage will lead to a decrease in economic growth. The paper also revealed an inverse relationship between public debt as an independent variable and economic growth as a dependent variable due to Iraq's violation of the golden rule, which dictates allocating debt to the investment side rather than consumptive spending. Paper type: Research paper.

Healthcare Value Assessment: A Critical Review of Economic Outcome Metrics and Future Directions

This paper provides a critical review of economic outcome metrics used in healthcare value assessment, emphasizing the evolving landscape of resource allocation, patient-centered approaches, and standardization efforts. With healthcare costs rising globally, the efficient allocation of limited resources is essential. Metrics like Quality-Adjusted Life Years (QALYs), Disability-Adjusted Life Years (DALYs), Incremental Cost-Effectiveness Ratios (ICERs), and Cost-Benefit Analysis (CBA) are central to guiding funding decisions, influencing insurance coverage, and shaping treatment prioritization. Emerging trends, such as the integration of artificial intelligence (AI) and big data, are enhancing the precision of these assessments, while patient-centered metrics underscore the importance of patient satisfaction and quality of life. Additionally, there is a growing push for the standardization of these metrics to create consistent frameworks across diverse health systems. This paper explores case studies, practical applications, and future directions to provide insights into how healthcare systems can adopt more effective, globally aligned economic assessments.

A Thematic Exploration of Gender Inequality in the Gujjar Community of Kotranka Tehsil, Rajouri District

The study looks into the gender disparities that exist among the Gujjar clan in Kotranka Tehsil, Rajouri District in Jammu and Kashmir. It investigates the socio-cultural and economic constraints that women confront in their communities, examining how traditional norms influence their autonomy, involvement, and access to resources. Data from 35 respondents were acquired using a descriptive study method, with structured interviews and questionnaires. The research indicates considerable limitations on women's daily lives, particularly in decision-making, mobility, and educational prospects. The findings show that male dominance prevails in financial and family decisions, but social conventions continue to limit women's roles. While some respondents acknowledge a shift toward more gender-equitable practices, traditional gender norms are nonetheless deeply established, restricting women's potential and increasing dependency. Despite government efforts and changing societal perceptions, Gujjar women in Kotranka Tehsil continue to encounter obstacles as a result of established socio-cultural expectations. The study emphasizes the crucial need for comprehensive policies and community-based programs to achieve gender equality and empower women in the Gujjar tribe.

Political Polarization and Finance

We review an empirical literature that studies how political polarization affects financial decisions. We first discuss the degree of partisan segregation in finance and corporate America, the mechanisms through which partisanship may influence financial decisions, and the available data sources used to infer individuals’ partisan leanings. We then describe and discuss the empirical evidence. Our review suggests an economically large and often growing partisan gap in the financial decisions of households, corporate executives, and financial intermediaries. Partisan alignment between individuals explains team and financial relationship formation, with initial evidence suggesting that high levels of partisan homogeneity may be associated with economic costs. We conclude by proposing several promising directions for future research.

Artificial intelligence, dynamic capabilities, and corporate financial asset allocation

The integration of artificial intelligence (AI) into corporate operations has revolutionized financial decision-making processes, yet our understanding of how AI adoption specifically impacts financial asset allocation remains limited. While existing research has explored AI's role in various financial applications, there is a critical gap in empirically examining the relationship between AI adoption and corporate financial asset allocation, particularly in understanding the organizational capabilities that enable firms to effectively leverage AI technologies. This study investigates this relationship using panel data from 25,811 firm-year observations of Chinese A-share listed companies (2008–2022). Through comprehensive regression analyses, we find that AI adoption significantly enhances corporate financial asset allocation efficiency, with this relationship being distinctly moderated by organizational dynamic capabilities. Notably, absorptive capability exhibits the strongest moderating effect, followed by innovative and adaptive capabilities. These findings advance our understanding of AI's role in corporate finance by demonstrating that the success of AI implementation in financial decision-making is contingent upon firms' underlying organizational capabilities. The results provide valuable insights for managers and policymakers in developing targeted strategies to enhance the effectiveness of AI adoption in corporate financial management.

An explainable deep learning approach for stock market trend prediction

Given the intricate nature of stock forecasting as well as the inherent risks and uncertainties, analysis of market trends is necessary to capitalize on optimal investment opportunities for profit maximization and timely disinvestment for loss minimization. In this work, we propose a deep learning model for predicting five distinct stock market trends: upward, downward, double top, rounded bottom, and rounded top. The proposed model surpasses common benchmarks, including support vector machine, random forest, and logistic regression, achieving an average accuracy of 94.9%, compared to 85.7% for random forest, 60.07% for support vector machine, and 52.45% for logistic regression. Furthermore the proposed model excels in F1-score, with a 94.85% performance, compared to 77.95% for random forest, 21.02% for support vector machine and 46.23% for logistic regression, across four real world diverse datasets. Additionally, we employ explainable AI (XAI) techniques, SHAP and LIME, to enhance interpretability, enabling stakeholders to understand the key factors driving predictions. The SHAP analysis reveals the top 10 most important/influential features, enabling feature reduction while maintaining performance. Interestingly, while accuracy slightly decreases with top 10 features, precision, recall, and F1-score improve, suggesting a trade-off between comprehensiveness and performance. These results demonstrate the potential for practical application in financial decision-making, providing a balance between interpretability and predictive power that can support investors in risk management and strategic planning.

Barriers to Recruitment and Retention Among Underrepresented Populations in Cancer Clinical Trials: A Qualitative Study of the Perspectives of Clinical Trial Research Coordinating Staff at a Cancer Center.

Although US research agencies have instituted peer review processes to require participant diversity in clinical trials before funding decisions are made, the underrepresentation of certain populations (eg, racial and ethnic minorities) in clinical trials remains a persistent challenge in biomedical research. This issue has the potential to affect the generalizability of findings and impede efforts to ensure the provision of high-quality healthcare across all populations. In this study, we examined barriers to the recruitment and retention of underrepresented populations in cancer clinical trials from the perspective of research coordinating staff. Semi-structured interviews were conducted at a US-based academic cancer center and included 6 patient-facing staff (clinical research coordinators) and 6 non-patient-facing staff (regulatory and financial specialists). Interview data were subjected to thematic analysis. To provide additional organizational context, descriptive data were obtained on the characteristics of clinical trials undertaken at the cancer center. The following themes emerged from the staff interviews: 1) absence of a consistent structure for decision-making and problem-solving related to recruitment and retention, 2) staff shortages, 3) administrative burden, and 4) lack of resources. In addition, descriptive data revealed that nearly half the trials, 64/134 (48%), offered informed consent only in English, and only 3/134 (2%) offered participant incentives or reimbursement (eg, for transportation). These interrelated organizational issues were indicative of inadequate systems for ensuring diverse and equitable representation in cancer clinical trials. Results indicate that overcoming barriers to underrepresentation may require dedicated support from sponsoring agencies in the form of evidence-based guidelines, learning collaboratives to facilitate implementation, technical support, resources, and oversight. For progress to be made therefore, both sponsors and cancer centers may need to assume joint responsibility for the implementation of effective systems for ensuring diverse and equitable representation in cancer clinical trials.

Social security, relative deprivation, digital capacity, and household financial investment behavior

Household financial investment behavior significantly impacts economic stability and growth, yet the complex interplay between social security, relative deprivation, and digital capability in shaping these decisions remains understudied, particularly in developing economies. While previous research has explored various factors influencing household investments, the mediating role of relative deprivation and the moderating effect of digital capability in the context of social security have been overlooked. This study addresses this gap by examining how these factors interact to influence household financial investment decisions in China. Using data from the China Family Panel Studies (CFPS) 2018, we employ regression analyses and robustness tests to investigate these relationships. Our findings reveal that comprehensive social security coverage encourages households to engage in riskier financial investments, with reduced relative deprivation enhancing this effect and increased digital capability strengthening the relationship between social security and investment decisions. These results underscore the importance of integrating behavioral and technological insights into social security policy to enhance economic participation and development. Our study contributes to a more nuanced understanding of the determinants of household financial behavior in emerging economies and offers valuable insights for policymakers seeking to promote financial inclusion and economic growth.

Determinants on the selection of rural households’ financial assets in China: marketization or financial literacy?

Financial literacy is an indispensable factor in household asset allocation, but market-oriented reforms are also an external factor that cannot be ignored. Using data from the 2013 and 2019 China Household Financial Survey (CHFS), this paper investigates whether the individual’s ability or the market system hinders rural households’ participation and asset investment in the financial market. Findings reveal that both marketization and financial literacy positively affect residents’ financial activities, but the roles of the two are not the same. Financial literacy is an essential factor in increasing participation in the financial market. Moreover, marketization and financial literacy significantly affect rural financial asset allocation decisions in four ways: changing risk preference, using the Internet, alleviating liquid constraints and increasing education expenditure on offspring. Besides, households’ financial behaviors exhibit a stronger correlation with improved network infrastructure, robust legal frameworks, favorable business credit environments, higher social media penetration, and enhanced human capital.

The Determinants of Financial Risk Tolerance and Portfolio Allocation: Have the Covid-19 Pandemic and the Ukraine War affected our Risk Tolerance?

This study focuses on examining the factors affecting financial risk tolerance and portfolio allocation among working-age highly educated adults in Bosnia and Herzegovina. It also explores how the Covid-19 pandemic and the Russian invasion of Ukraine have affected these financial decisions. We employed multinomial logistic regression, incorporating subjective and objective risk tolerance measures, and considered various socio-demographic and psychological risk-taking factors. The findings reveal that risk attitudes, along with investment knowledge and experience are the primary determinants of financial risk tolerance, while socio-demographic variables have minimal effect. Moreover, the recent financial turmoil resulting from the Covid-19 pandemic and the Russian invasion of Ukraine substantially influenced individual's subjective risk tolerance, with no impact on the objective risk tolerance, which is our main contribution to the existing literature. This study contributes to understanding of financial risk tolerance in emerging markets, shedding light on the key determinants and impact of significant global events.

Study on AI-Assisted Statistical Approach for Improving Stock Price Prediction Accuracy

Stock price (SP) prediction is crucial for financial decision-making, yet achieving excessive accuracy remains challenging due to market volatility. Current models frequently struggle with capturing the complexities of SP fluctuations, leading to significant prediction errors. This study aims to improve SP prediction accuracy through a unique technique that uses AI-assisted statistical techniques with the Redefined Spotted Hyena great-tuned Dynamic Gated Recurrent Unit (RSHDGRU). The dataset includes the closing costs of numerous stocks influenced through market demand, corporate performance, and economic situations. Pre-processing using Z-score normalization to standardize the statistics. The proposed RSH-DGRU model significantly outperforms traditional techniques, achieving a R-squared (R²) value of 0.9852, a Mean Absolute Error (MAE) of 15.624 and Root Mean Square Error (RMSE) of 20.321. These results reveal the effectiveness of the RSH-DGRU in minimizing prediction errors and accurately capturing the complexities of SP fluctuations. By evaluating its overall performance with present fashions, the RSH-DGRU technique showcases stronger predictive capabilities. Financial analysts and investors that have access to a strong instrument for more precise market projections make better-informed investment selections.

Implementation of a Financial Recording Application for Business Sustainability for MSMEs in the Kota Bambu Selatan District Area, West Jakarta

Limited understanding and financial recording systems cause MSMEs to experience difficulties in making appropriate financial decisions in running a business and accessing capital credit. In the digital era, understanding technology and innovation is the key to increasing the competitiveness of MSMEs. This community service activity aims for participants to gain an understanding of financial management in the form of simple digital-based planning and recording for MSMEs. Learning outcomes are measured by improving participants' skills in using the digital financial recording application (BukuWarung) to carry out financial bookkeeping and recording. The various features in the BukuWarung financial recording application have the potential to make it easier for MSMEs to prepare their business financial books. The activity implementation method consists of three stages. The first preparation stage includes pre-survey, team formation, making and submitting proposals, coordinating teams and partners as well as preparing materials and training materials. The second stage is the program implementation stage in the form of socialization. Socialization is carried out through counseling (presentation of material) and discussions. The third stage is the evaluation and reporting stage. Evaluation is carried out by comparing the conditions of partners before and after program implementation using the observation method. The training activities were carried out offline in two sessions, namely the first session was lecturing, namely the delivery of training material on the use of digital financial recording applications for MSMEs by resource persons and the second session was discussion, namely discussion activities with the participants.

CORPORATE DIVIDEND DECISION AND FIRM VALUE IN NIGERIA

Corporate dividend decisions play a significant role in managerial decisions, and is often considered as the fulcrum of financial management decisions. While making these decisions, corporate finance is single-minded about maximizing the value of the firm. But the raging issue has been the lack of consensus on the effect of dividend policy on firm. This study therefore undertakes a comprehensive review of dividend policy theories and empirical studies on dividend policy in relation to firm value, with particular focus on Nigeria. The paper adopts the exploratory research approach using secondary data sources involving extensive review of relevant articles, theoretical and empirical studies, as well as other relevant materials. The paper established that, despite the raging theoretical controversies and contradictions of past empirical findings, there is unanimity among many researchers that corporate dividend decisions exert significant influence on firm value- a position which validates the arguments in favour of the relevance of dividends policy in determining firm value. The paper therefore recommends that finance managers of firms should aim at finding an optimal dividend policy, which is the one that maximizes the company stock price that leads to the maximization of firm value.