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The Role of Cognitive Characteristics, Personality Traits, and Financial Literacy in Financial Decision Making

María Roa García (), Ignacio Garron () and Jonathan Barboza Pineda ()

Chapter 7 in Financial Decisions of Households and Financial Inclusion: Evidence for Latin America and the Caribbean, 2018, pp 193-244 from Centro de Estudios Monetarios Latinoamericanos, CEMLA

Abstract: The aim of this study is to analyze the relation between cognitive characteristics, personality traits, and financial literacy in savings and credit financial decision making, as well as participation in the formal financial sector. Our analysis is based on the Financial Capabilities Survey, which was applied in four countries of the Andean region: Bolivia, Colombia, Ecuador, and Peru. The empirical analysis shows the importance of numerical abilities and personality traits associated with conscientiousness on the tendency to save and participate in formal financial markets. The results of our instrumental variable analysis demonstrate that the role of financial literacy may be greater in more complex decisions or decisions that require more information, such as involving the use of credit, than for simpler decisions such as holding a basic savings account.

Keywords: savings; credit; personality traits; cognitivie characteristics; financial literacy. (search for similar items in EconPapers)
JEL-codes: A20 D12 D14 G11 I20 J26 (search for similar items in EconPapers)
Date: 2018
ISBN: 978-607-7734-99-4 (online)
Note: Joint Research Program of the Central Bank Researchers Network
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