Biased Subjective Financial Literacy and Investment in Stocks and Cryptocurrencies
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2025-07-04
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en
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This thesis researches biased subjective financial literacy and its effect on risky investment concerning stocks and cryptocurrencies.
Financial literacy is generally found to be related to such forms of risky investment. Objective, knowledge, and subjective, (self)confidence in, financial literacy components are both influential on their own. Biased subjective literacy can occur in two ways; overestimating actual financial literacy, being overconfident, or underestimating actual financial literacy, being underconfident. Comparing these forms of (positively and negatively) biased subjective literacy to those with similar objective financial literacy but unbiased subjective financial literacy, those rationally unconfident or confident, results in more specific understanding about the relationships between financial literacy and risky investment (participation).
Self-collected survey data is used, consisting of a total sample of 140 Dutch adults. It is found that having negatively biased subjective financial literacy decreases the likelihood of stock market participation (underconfident vs rationally confident in financial literacy), but not significantly changes the likelihood of cryptocurrency market participation, investing higher amounts in stocks or investing higher amounts in cryptocurrencies. Having positively biased subjective financial literacy, being overconfident, does not consistently and significantly affect the likelihood of any of former specified investment behaviours, when compared to those rationally unconfident in financial literacy.
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Faculteit der Managementwetenschappen