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These studies suggest that higher financial literacy generally leads to better investment decisions, improved portfolio diversification, and higher returns, though the impact can vary by demographic factors such as age, education, and gender.
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Financial literacy plays a crucial role in shaping retail investors' behaviors and decisions. Understanding the impact of financial literacy on retail investment can help in designing better educational programs and policies to enhance financial outcomes for individuals.
Positive Impact on Portfolio Diversification:
Improved Investment Returns:
Increased Participation in Financial Markets:
Enhanced Decision-Making and Risk Management:
Behavioral Differences Based on Financial Literacy:
Influence of Subjective Financial Literacy:
Financial literacy significantly influences retail investment behaviors and outcomes. Higher financial literacy leads to better portfolio diversification, improved investment returns, increased market participation, and more informed decision-making. Both objective and subjective financial literacy play crucial roles in shaping these behaviors, highlighting the importance of financial education programs to enhance retail investors' financial welfare.
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