Exploring the relationship between investment choices, cognitive abilities risk attitudes and financial literacy

Muhammad Mushafiq

doi:10.1108/jeas-07-2021-0130

Exploring the relationship between investment choices, cognitive abilities risk attitudes and financial literacy

Abstract

Purpose The main purpose of this study is to investigate the investment choices' relationship with cognitive abilities, risk aversion, risky investment intentions, subjective financial literacy and objective financial literacy. Design/methodology/approach To examine the relationship, two investment choices were given to 256 subjects from Pakistan. Questionnaire had total 20 questions for measuring five variables. To review this nexus, discriminant analysis was used as to explore the depth of the nexus that is the ability of the variables to predict the investment choices. Findings This study establishes the findings that Investment choices are guided by risk aversion, risky investment intentions, financial literacy (subjective and objective) and cognitive abilities. The risk aversion has negative relation to investment choices and other variables depict positive relationship to with investment choices. Practical implications This study provides a new and useful understanding into the existing literature on investment choices. The results are significant as the cognitive abilities show a positive contribution to the investment choices. This is point of significance as the portfolio managers and advisors would get help in regards of advising investments as they are aware what factors impact the investment choices. Originality/value This study is novel in its nature to evaluate investment choices using the cognitive ability alongside risk attitudes and financial literacy.

Citations

6

CrossRef
0

Web of Science
6

Scopus

Author (1)

Muhammad Mushafiq

Cite as

Full text

full text is not available in portal

full content of the article see on external site open in new tab

Keywords

S INVESTMENT CHOICES, COGNITIVE ABILITIES, RISK ATTITUDES, FINANCIAL LITERACY, DISCRIMINANT ANALYSIS

Details

Category:

Articles

Type:

artykuły w czasopismach

Published in:

Journal of Economic and Administrative Sciences no. 39, pages 1122 - 1136,
ISSN: 1026-4116

Language:

English

Publication year:

2023

Bibliographic description:

Mushafiq M.: Exploring the relationship between investment choices, cognitive abilities risk attitudes and financial literacy// Journal of Economic and Administrative Sciences -Vol. 39,iss. 4 (2023), s.1122-1136

DOI: