Variable Relationships in Finance
Variable Relationships in Finance
Understanding how different factors influence financial decision-making.
Behavioural Finance
Exploring the psychological influence on investors.
Independent Variable
Market trends and economic indicators often serve as this.
Mediator Variable
How cognitive biases mediate the effect of market information on financial choices.
Moderator Variable
Financial literacy can moderate the impact of biases on investment decisions.
Financial Literacy
Knowledge base that informs investment choices.
Dependent Variable
Could be the outcome of interventions aimed at improving financial decisions.
Independent Variable
Often a predictor of better financial decision-making results.
Moderator Variable
Modulates how individuals react to market changes and advice.
Behavioural Biases
Innate tendencies that affect judgment.
Mediator Variable
Biases mediate between knowledge and the financial decisions made.
Moderator Variable
The extent of biases can moderate the relationship between market conditions and investor reactions.
Financial Decision-Making
The process leading to financial outcomes.
Dependent Variable
The result of numerous psychological and knowledge-based inputs.
Mediator Variable
Financial literacy level can mediate the decision-making process.
Moderator Variable
Behavioural biases can alter the effect of financial information on decisions.
Individual Investor
A person making investment choices.
Dependent Variable
Individual investors' return on investment.
Independent Variable
Their financial knowledge or capital.
Moderator Variable
The individual's level of risk tolerance can moderate investment choices.
Theoretical Framework of Financial Literacy and Investor Behavior
Understanding the influence of financial literacy on investment decisions and how behavioral biases are mediated.
Financial Literacy (IV)
The knowledge and understanding of financial concepts and risks.
Concept Knowledge
Basic principles of finance and investment.
Risk Comprehension
Understanding of potential gains and losses.
Decision-making
Influence on sound financial decisions.
Financial Education
Impact of educational background on financial understanding.
Financial Decision Making (Mediator)
The process of making choices regarding wealth management.
Investment Choices
Selecting assets or securities to invest in.
Risk Assessment
Evaluating the potential risks involved with investments.
Strategic Planning
Long-term financial planning and goal setting.
Information Utilization
Use of financial information in decision making.
Behavioural Biases (DV)
The psychological factors that influence an investor's decisions.
Overconfidence
Excessive belief in one's own abilities affecting trades.
Herd Behavior
Following the crowd without independent analysis.
Anchoring
Relying heavily on the first piece of information encountered.
Loss Aversion
Preference to avoid losses over acquiring equivalent gains.
Behavioural Finance (Moderator)
The field that applies psychology to financial anomaly studies.
Investor Psychology
Examining emotional and cognitive factors.
Market Anomalies
Understanding irregularities that challenge market efficiency.
Heuristics
Mental shortcuts in decision-making processes.
Individual Analysis
Assessing personal traits affecting investment behavior.
Individual Investor (Moderator)
Personal characteristics that shape the investment strategy.
Personal Goals
Objective-based financial decision-making criteria.
Risk Tolerance
Individual capacity to endure investment volatility.
Wealth Status
Impact of personal net worth on investment behavior.
Age
Correlation between age and investment strategy preference.