RT Journal Article
SR Electronic
T1 Exploring the Linkages between Financial Literacy, Behavioral Biases, and Stock Market Decisions
JF The Journal of Wealth Management
FD Institutional Investor Journals
SP 82
OP 104
DO 10.3905/jwm.2022.1.164
VO 25
IS 1
A1 Heena Thanki
A1 Sweety Shah
A1 Anushree Karani
YR 2022
UL https://pm-research.com/content/25/1/82.abstract
AB The aim of this article is to find out the linkages between financial literacy, behavioral biases, and stock market investment decisions. Further, the primary objective is divided into two parts; first, the relationship between financial literacy and behavioral biases, namely cognitive biases (representative bias, hindsight bias, mental accounting bias, and anchoring bias) and emotional biases (overconfidence, disposition, herding, and familiarity bias) was investigated. Second, the relationship between above stated behavioral biases and stock market investment decisions were explored. To satisfy the objectives of the study, a descriptive cross-sectional research design with judgmental sampling was followed. The data were collected from 477 Indian stock market investors. We found that financial literacy significantly negatively influences all the cognitive biases whereas it does not influence emotional biases. All the cognitive and emotional biases significantly impact the stock market investment decisions. Additionally, it was noticed financial literacy significantly reduces hindsight bias whereas overconfidence bias highly influences the stock market investment decisions.