Date of Publication

2023

Document Type

Bachelor's Thesis

Degree Name

Bachelor of Science in Management of Financial Institutions

Subject Categories

Behavioral Economics | Finance

College

Ramon V. Del Rosario College of Business

Department/Unit

Financial Management Department

Thesis Advisor

Liberty S. Patiu

Defense Panel Chair

Vivian Y. Eleazar

Defense Panel Member

Princess Riza Ong
Roderick Pangindian

Abstract/Summary

When making investment decisions, investors evaluate and weigh all the information they have gathered. Their financial decisions are influenced by their financial literacy and their ability to assimilate new information. However, investors may filter certain information based on their personal beliefs and preferences resulting in behavioral biases. Previous studies examining the impact of behavioral biases on investment decisions were conducted in other demographic settings. This paper focuses on analyzing the effects of behavioral biases (Overconfidence, Herding, Disposition Effect, and Risk Aversion) on the investment decisions of Filipino Millennials and Generation Z. Primary data were acquired from 390 Filipino retail investors, residing in the National Capital Region (NCR), Philippines. Hierarchical regression was utilized to analyze the collected data. This assessed the relationship between the behavioral biases and investment decisions, and examined the moderating role of financial literacy. The results of the study revealed that among Millennial investors, overconfidence, herding, disposition effect, and risk aversion have a significant impact on their investment decisions. Among Generation Z investors, overconfidence, herding, and disposition effect have a significant impact on investment decisions. However, there was no significant improvement in Generation Z's investment decisions when risk aversion was added to the model. The researchers found that financial literacy moderates the effect of overconfidence, herding, and risk aversion on investment decisions of Millennials, while financial literacy does not moderate the relationship between disposition effect and investment decisions. In comparison, the moderating effect of financial literacy is found to be statistically insignificant among Generation Z.

Abstract Format

html

Language

English

Format

Electronic

Keywords

Generation Y—Philippines—Finance, Personal; Generation Z—Philippines—Finance, Personal; Financial literacy—Philippines

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Embargo Period

8-8-2023

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