Financial Literacy and Behavioral Biases: A Study of Gen Z Investment Behavior

Author

Mr. V.Narendra, Ms. K.Lalithya


Abstract

 This paper investigates the relationship between financial literacy and behavioral biases and investment behaviour in Gen Z investors. An online survey questionnaire was used to gather data. 32 valid responses were analysed using chi-square, one-way ANOVA and linear regression calculations in Microsoft Excel. Financial literacy was found to have a statistically significant positive correlation to investment behaviour (R = 0.325) and behavioral biases were found to be more strongly correlated (R = 0.487). 

Financial literacy had a significant effect on biases, but counter to expectations, more financially literate respondents had more biases. 53% of the variance in investment behaviour was explained by their financial literacy and biases, but when both variables are entered into the model only biases are significant. 

Of the potential personal factors, only current income was significantly related to investment behaviour; age, gender, current activity and investing experience were not. Due to the small sample size this study should be considered an initial exploration rather than a conclusive study, and its indication that financial education should include learning about behavioral biases.



Keywords

Financial literacy; Behavioral biases; Gen Z investors; Investment behavior; Herding; Overconfidence



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References


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