Abstract
We examine the influence of financial literacy and perceptions of financial knowledge on households’ financial risk-taking. Greater literacy and self-belief in one's literacy positively relate to equity ownership. However, self-awareness of illiteracy reduces participation by about 5%. We find that financial self-awareness is impacted by innate traits and environmental elements. Specifically, it is reduced by risk-seeking preferences and rising income but increases with income uncertainty. Overall, we demonstrate that accurate self-assessment has implications for individuals’ portfolio choices, which suggests policy implications for improving financial decision-making.
Original language | English (US) |
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Article number | 101445 |
Journal | Finance Research Letters |
Volume | 38 |
DOIs | |
State | Published - Jan 2021 |
Keywords
- Financial literacy
- Self-awareness
- Stock market participation
ASJC Scopus subject areas
- Finance