An Ordered Probit Approach for Exploring the Role of Self-Efficacy and Financial Literacy on Personal Finance Behavior

Mohammad Hosein Sadraei () and Mohammad Ebrahim Aghababaei ()
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Mohammad Hosein Sadraei : Sistan & Balouchestan University
Mohammad Ebrahim Aghababaei : Faculty of Financial Sciences, Kharazmi University

Journal of Money and Economy, 2018, vol. 13, issue 2, 177-194

Abstract: The present study investigates the impact of financial self-efficacy on personal finance behavior. To this end, the data collected from the questionnaire have been employed. Once the validity and reliability of the questionnaire are confirmed, the relation between financial self-efficacy and the likelihood of holding a specific financial product is studied using the multivariate Probit model. Products are subsequently categorized into two distinct groups based on the type of relationship. Afterward, the relation between financial self-efficacy and the likelihood of holding the number of products in each category is evaluated using the ordered Probit model. In this study, the cluster random sampling method is employed. The results are indicative of a negative and significant relationship between financial self-efficacy and the likelihood of holding bank facilities as well as a positive and significant relationship between financial self-efficacy and the likelihood of holding time deposits, Qarz Al-Hassaneh savings account, insurance, and corporate bonds and stocks. Furthermore, it is inferred that financial self-efficacy has a positive and significant impact on desirable financial behavior and a negative and significant impact on undesirable financial behavior.

Keywords: Financial Self- efficacy; Financial Behavior; Personal Finance (search for similar items in EconPapers)
JEL-codes: D03 D14 (search for similar items in EconPapers)
Date: 2018
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Persistent link: https://EconPapers.repec.org/RePEc:mbr:jmonec:v:13:y:2018:i:2:p:177-194

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