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Asset allocation is a complex phenomenon that cannot be understood without applying human behavior and heuristic biases to test. This shift from traditional finance to cognitive domain can assist in predicting behavior and decisions thereof. Early research had ignored investment decisions taken by a household, therefore, this paper examines the effect of socio-demographic and behavioral traits upon decisions concerning the asset allocation of the general community. Since socio-demographics and behavioral traits have been found to be significant in predicting the investment decisions, these have been taken as predictors. Literature suggests that financial literacy could moderate these decisions in the behavioral domain of investment decisions, therefore, the impact of predictors has been studied while being moderated by financial literacy. The study is descriptive in nature, and analyzed through the quantitative approach, survey instrument in the form of questionnaires containing 70 items from 775 respondents. The study finds significant moderating effect of financial literacy upon investment diversity in relation to socio-demographics, financial attitude and decision behavior. Moreover, with the increase in age, education, and income, investment diversity improves. It calls for policymakers’ attention to declare a financial awareness emergency as 64% respondents could not understand even the literacy questions. Study recommends the improvement of financial inclusion and work out a methodology for improving financial awareness for the optimization of investment decisions

Muhammad Khurram Shehzad Niazi, Qaisar Ali Malik. (2019) Financial Attitude and Investment Decision Making - Moderating Role of Financial Literacy, NUML International Journal of Business & Management, Volume 14, Issue 1.
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