Financial Literacy, Psychological Biases, and Financial Decision-Making Among Millennial Working Professionals in Bengaluru: An Empirical Analysis
DOI:
https://doi.org/10.69980/bma.v12i3.2532Keywords:
Financial literacy, Psychological biases, Financial decision-making, Behavioural finance, Working professionals, Investment experienceAbstract
Financial choices related to saving, borrowing, investing, and retirement have become more complicated for working individuals, and knowledge of finance and investment is not a complete indicator of how people make decisions. This study focuses on the relationship between perceived financial literacy and the psychological biases with financial decisions among millennial working professional (30-45 years) in Bengaluru, Karnataka, India. It is a secondary analysis of a public cross sectional survey data (N = 400) obtained by a purposive sampling. The composite scales demonstrated good internal consistency (α = .854 – .886) and exploratory factor analysis (Principal Axis Factoring, Varimax rotation; KMO = .899) revealed a three-factor solution that was consistent with the targeted constructs. The dummy-coded demographic controls accounted for 19.7% of the variance in financial decision-making, financial literacy added another 7.1%, and the final model accounted for 33.7% of the variance (adjusted R² = .320) in a hierarchical OLS regression. Financial-literacy composite (β = .283) and psychological-bias composite (β = .322) were significantly and positively connected with financial-decision making (p < .001). All measures are self-reported and cross-sectional, meaning that relationships, not causes, are detected. Financial capability programmes might have to take care of the behavioural tendencies in addition to knowledge.
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