Litvinova, V. V. (2020). Individual Financial Behavior and Determinants. Zhurnal Economicheskoj Teorii [Russian Journal of Economic Theory], 17 (1), 230-237
The sphere of personal or household finances has been the subject of numerous theoretical and empirical studies in recent years. Some researchers focuse on the adoption of financial decisions at the individual level (most often the financial behavior of investors in the stock market or pension savings market is studied), while others take a couple or a household as a unit of analysis. Regardless of the study perspective, it is interesting to study the financial behavior and the factors that determine it. The selection of these factors will contribute to the customization of financial products, that is, their individual adjustment to each client. The understanding the factors of financial behavior is the first step to forecasting it. The purpose of this article is to identify the main factors of individual financial behavior. The research method is a critical review of domestic and foreign studies, which determines the factors influencing the individual financial behavior. It showes that there are internal factors (intellectual, psychological and socio-demographic characteristics), as well as external factors, which include territorial, cultural features, economic and infrastructural opportunities, political factors. The most important determinants of financial behavior are financial literacy and psychological factors. The financial literacy level has greater influence on making savings strategies and credit decisions than the size of personal income, traditionally regarded as the key determinant of the financial behavior. There is also a significant influence of psychological factors on the individual’s decision-making. Regression analysis shows that psychological factors have a greater influence on financial behavior than economic ones.
Burdyak, A. Ya. (2014). Denezhnye sberezheniya domashnikh khozyaystv na raznykh etapakh zhiznennogo tsikla [Households’ Monetary Savings over the Life Cycle]. Nauchno-issledovatel’skiy finansovyy institut. Finansovyy zhurnal [Research Financial Institute. Financial journal], 1, 129–140. (In Russ.)
Galishnikova, E. V. (2012). Finansovoe povedenie naseleniya: sberegat’ ili tratit’ [Financial Behavior of the Population: Saving or Spending]. Nauchno-issledovatel’skiy finansovyy institut. Finansovyy zhurnal [Research Financial Institute. Financial journal], 2, 133–140. (In Russ.)
Kahneman, D. (2013). Dumay medlenno… reshay bystro [Think slowly … decide quickly]. Moscow, Russia: AST, 656. (In Russ.)
Sushko, E. Yu. (2017). Finansovoe povedenie naseleniya i ego determinanty [Financial behavior of the population and its determinants]. Finansy i kredit [Finance and credit], 12, 670–682. (In Russ.)
Agarwal, S., Amromin, G., Ben-David, I., Chomsisengphet, S. & Evanoff, D. D. (2011). Financial Counseling, Financial Literacy, and Household Decision Making. In Financial Literacy: Implications for Retirement Security and the Financial Marketplace. UK: Oxford University Press, 291.
Ameriks, J., Caplin, A. & Leahy, J. (2004). The Absent-Minded Consumer. NBER Working Paper Series, from https://www.nber.org/papers/w10216.pdf.
Bennet, E., Selvam, M., Indhumathi, G., Ramkumar, R.R. & Karpagam, V. (2011). Factors influencing retail investors’ at- titude towards investing in equity stocks: A study in Tamil Nadu. Journal of Modern Accounting and Auditing, 7(3), 316–321.
Bernasek, A. & Bajtelsmit, V. L. (2002). Predictors Of Women’s Involvement In Household Financial Decision-Making. Financial Counseling and Planning, 2, 39–48.
Breuer, W. & Salzmann, A. J. (2012). National Culture and Household Finance. Global Economy and Finance Journal, 5(1), 37–52.
Browning, M. (2009). The Saving Behaviour of a Two-person Household. Scandinavian Journal of Economics, 102(2), 235–251.
Bruni, L. & Sugden, R. (2007). The road not taken: how psychology was removed from economics, and how it might be brought back. The Economic Journal, 5(117), 146–173, available at: https://onlinelibrary.wiley.com/doi/full/10.1111/ j.1468–0297.2007.02005.x.
Carr, P. B. & Steele, C. M. (2010). Stereotype threat affects financial decision making. Psychological Science, 21(10), 1411–1416.
Collins J. M. (2012). Financial advice: A substitute for financial literacy? Financial Services Review, 21, 307–322.
Dinga, E., Pop, N., Dimitriu, M. & Milea, C. (2011). Modeling the Financial Behavior of Population (1) — Conceptual Assignations. Romanian Journal of Economic Forecasting, 3, 239–254.
Doya, K. (2008). Modulators of decision-making. Nat. Neurosci, 11, 410–416.
Fonseca, R., Mullen, K. J., Zamarro, G. & Zissimopoulos, J. (2012). What Explains the Gender Gap in Financial Literacy? The Role of Household Decision. The Journal of Consumer Affairs, 46, 90–106.
Friedberg, L. & Webb, A. (2006). Determinants and Consequences of Bargaining Power in Households. NBER Working Paper Series, available at: https://pdfs.semanticscholar.org/5c60/9038aebb3d614c44d15ca846702530469366.pdf.
Jureviciene, D. & Kristina, J. (2012). The Impact of Individuals’ Financial Behaviour on Investment Decisions. Paper presented at the annual meeting for the Society of 1st. Electronic International Interdisciplinary Conference, Slovakia, 3–7.
Kübilay, B. & Bayrakdaroğlu, A. (2016). An Empirical Research on Investor Biases in Financial Decision-Making, Financial Risk Tolerance and Financial Personality. International Journal of Financial Research, 2(7), 171–182.
Lakshmi, P., Visalakshmi, S., Thamaraiselvan, N. & Senthilarasu, B. (2013). Assessing The Linkage of Behavioral Traits and Investment Decisions Using SEM Approach. Journal of Economics and Management, 7(2), 221–241.
Lodhi, S. (2014). Factors influencing individual investor behaviour: An empirical study of city Karachi. Journal of Business and Management, 16(2), 68–76.
Lusardi, A. (2009). Financial Literacy: an Essential Tool for Informed Consumer Choice? NBER Working Paper Series Financial, available at: https://www.nber.org/reporter/2009number2/lusardi.html.
Murgea, A. (2010). Classical and Behavioural Finance in Investor Decision. Annals of University of Craiova — Economic Sciences Series, 2 (38), 212–223.
Obamuyi, T. M. (2013). Factors influencing investment decisions in capital market: A study of individual investors in Nigeria. Organizations and Markets in Emerging Economies, 4(7), 141–161.
Sarwar, A. & Afaf, G. (2014). A comparison between psychological and economic factors affecting individual investor’s decision-making behavior. American Journal of Business and Management, 2(3), 77–94.