Impact of Financial Literacy on Investment Behaviour of Millennial in Developing Countries
DOI:
https://doi.org/10.5281/zenodo.15494185Keywords:
financial literacy, investment behaviour, behavioural biases, overconfidence, herding biasesAbstract
This study has focused on the impact of financial literacy on the investment behaviour of the millennials in developing countries. As economies evolve and grow more complex, the requirement of the financial knowledge has become increasingly significant, especially for the younger generation. This research study has therefore identified how millennials in the developing countries often make some poor investment decisions influenced by the behavioural biases and a lack of financial education. Unlike other individuals in the developed countries who demonstrated higher levels of the financial awareness, many millennials in developing regions, like, South Asia or Africa face several financial instabilities resulting from the inadequate financial skills. Using qualitative secondary methodology, this study has analysed previous literature, reports and case studies to investigate the role of financial literacy in shaping the savings and investment behaviour, key findings highlight that financial literacy positively correlate with the stronger saving-investment habits and negatively correlate with the financial issues. Two major psychological biases, namely, overconfidence and herding can be found to influence the investment choices of the millennials. Furthermore, this study shows that financial literacy can mitigate the effect of these biases, enabling the better decision-making.
A conceptual framework has also been proposed to illustrate the relationship between the financial literacy, behavioural biases and the investment behaviour. The findings suggest that strengthening financial literacy among the millennials can contribute not only to the personal financial well-being, but also it enhances the economic stability within the developing countries. It recommends that financial education at the early stage can increase the investment awareness initiatives to empower the youth with necessary financial decision-making skills. This study further concludes the enhancing financial literacy is the key to foster more rational, informed and sustainable investment behaviour among the millennials within the developing countries.
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