FINANCIAL LITERACY AND PORTFOLIO DIVERSIFICATION: THE ROLE OF MODERATORS

In this paper, we have focused on financial literacy as the primary predictor of portfolio diversification in investors. In contrast to other similar studies which use socio-demographic variables as control, we used socio-demographic variables as moderating variables. We have used multiple regressio...

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Bibliographic Details
Published in:Journal of economics and economic education research 2021-05, Vol.22 (2), p.1-27
Main Authors: Malekpour, Mehdi, Fazlzadeh, Alireza, Jabarzadeh, Younis
Format: Article
Language:English
Subjects:
Compound interest
Decision making
Definitions
Dictionaries
Diversification
Financial literacy
Financial Problems
Investments
Investor behavior
Knowledge
Literacy
Literature reviews
Performance Based Assessment
Portfolio diversification
Questionnaires
Reading Ability
Regression analysis
Researchers
Securities markets
Self evaluation
Sociodemographics
Stock exchanges
Writing Ability
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Summary:In this paper, we have focused on financial literacy as the primary predictor of portfolio diversification in investors. In contrast to other similar studies which use socio-demographic variables as control, we used socio-demographic variables as moderating variables. We have used multiple regressions to analyze the model. Results show that although financial literacy is an acceptable predictor of portfolio diversification (R Squared = 0.122; p < .01), importing moderating variables improves the model significantly (R Squared = 0.868; p < .01). Financial education of investors according to their group differences is the main suggestion we have proposed in this paper. Between group differences, such as differences in gender and age groups, suggest that focusing on investors' financial educations must be different according to their groups. In the end, as a separate part in appendix, we have collected a comprehensive review of financial literacy definitions and measurement methods, introduced by different researchers which were necessary in this field.
ISSN:1533-3604
1533-3590