Open Access
Behavioral Biases, Financial Literacy, and Investment Decisions: A Study on Women Entrepreneurs
Keywords:
Heuristics
Financial Literacy
Female Entrepreneurs
Investment Decisions
Abstract
Aim: The purpose of this study is to analyze the effect of the four heuristic biases Anchoring, Overconfidence, Representativeness as well as availability on the investment choices of female SMEs entrepreneurs in Banyumas, Cilacap and Purbalingga, and to analyze the moderating influence of financial literacy on these relationships. Methodology: Conducted with a sample size of 64 respondents, using quantitative methodology with a structured questionnaire survey and analyzing the data using Smart PLS. Findings: The results prove that there is a strong relationship between financial literacy and investing decision-making, especially in terms of Anchoring and Overconfidence bias. However, financial literacy does not affect the relationship between the four heuristic biases and investing decisions. Overconfidence is proven to have a considerable effect on investment decisions. Implications/Novel Contribution: The research underscores the need to strengthen financial literacy among women entrepreneurs so that they do not fall into the traps of biased investment decisions, while also suggesting further exploration into the scope of financial literacy’s role in overcoming other heuristic biases.References
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Adil, M., Singh, Y., & Ansari, M. S. (2022). How financial literacy moderate the association between behaviour biases and investment decision? Asian Journal of Accounting Research, 7(1), 17-30.
Adiputra, I. G. (2021). The influence of overconfidence, representative bias, and risk tolerance in investment decision making: Evidence on stock investors in Indonesia. Journal of Hunan University Natural Sciences, 48(4).
Aeni, N. N., Tubastuvi, N., Purwidianti, W., & Utami, R. F. (2024). Determinants of Millennial Investment Decision-Making in the Sharia Capital Market: A Comprehensive Review. Jurnal Ekonomi Dan Bisnis Airlangga Volume, 34(1).
Agarwal, . S. S., S. (2023). Behavioral biases and investment decision: A recent systematic literature review. International Journal of Statistics and Applied Mathematics, 8(4), 84–94.
Ahmad, M., & Shah, S. Z. A. (2020). Overconfidence heuristic-driven bias in investment decision-making and performance: Mediating effects of risk perception and moderating effects of financial literacy. Journal of Economic and Administrative Sciences, 38(1), 60-90.
Babajide, A. A., & Adetiloye, K. A. (2012). InvestorsâTM behavioural biases and the security market: An empirical study of the nigerian security market. Accounting and Finance Research, 1(1), 219-219.
Bagis, F. (2021). A case study of the performance of muslim msmes in purwokerto city. Jurnal Ilmiah Ekonomi Islam, 7(3), 1961-1969.
Bagis, F., Faridli, E. M., Awaludin, A., Umairoh, J. P. M., et al. (2024). Invigorate survival and resilience of msmes: The role of entrepreneurial knowledge, entrepreneurial motivation, and technological advancement. Journal of Social Entrepreneurship Theory and Practice, 3(2), 28.
Bertrand, M. (2020). Gender in the twenty-first century. In Aea papers and proceedings (Vol. 110, pp. 1–24).
Bhavani, M. (2020). A Study on problems of women entrepreneurs at Mysore district, India. Our Heritage, 68(1), 9183-9200.
Bongomin, G. O. C., Munene, J. C., Ntayi, J. M., & Malinga, C. A. (2018). Nexus between financial literacy and financial inclusion: Examining the moderating role of cognition from a developing country perspective. International Journal of Bank Marketing, 36(7), 1190-1212.
Dangol, J., & Manandhar, R. (2020). Impact of heuristics on investment decisions: The moderating role of locus of control. Journal of Business and Social Sciences Research, 5(1), 1-14.
Din, S. M. U., Mehmood, S. K., Shahzad, A., Ahmad, I., Davidyants, A., & Abu-Rumman, A. (2021). The impact of behavioral biases on herding behavior of investors in Islamic financial products. Frontiers in Psychology, 11, 600570.
Esubalew, A. A., & Raghurama, A. (2020). The mediating effect of entrepreneurs’ competency on the relationship between Bank finance and performance of micro, small, and medium enterprises (MSMEs). European Research on Management and Business Economics, 26(2), 87-95.
Fauzi, F., Antoni, D., & Suwarni, E. (2021). Mapping potential sectors based on financial and digital literacy of women entrepreneurs: A study of the developing economy. Journal of Governance and Regulation/Volume, 10(2).
Fitriana, R. (2023). Cultivating inclusivity: A comprehensive study of diversity, inclusion initiatives and employee satisfaction. Journal of administrative and business studies, 9(3), 146-162.
Gavrilakis, N., & Floros, C. (2022). The impact of heuristic and herding biases on portfolio construction and performance: The case of Greece. Review of Behavioral Finance, 14(3), 436-462.
Ghozali, I. (2018). Aplikasi analisis multivariete dengan program ibm spss 23. Badan penerbit universitas Diponegoro.
Goyal, K., & Kumar, S. (2021). Financial literacy: A systematic review and bibliometric analysis. International Journal of Consumer Studies, 45(1), 80-105.
Gujarati, D. (2011). Econometrics by example. Palgrave Macmillan.
Hasan, S. M. (2020). Female Entrepreneurship: Do urban centers ease out the challenge? An analysis for Pakistan. Urban studies and entrepreneurship, 163-179.
Huhmann, B. A. (2017). Literacy matters in marketing. International Journal of Bank Marketing, 35(5), 750-760.
Hunguru, P., Sibanda, V., & Tadu, R. (2020). Determinants of investment decisions: A study of individual investors on the Zimbabwe stock Exchange. Applied Economics and Finance, 7(5), 38-53.
Iram, T., Bilal, A. R., & Ahmad, Z. (2023). Investigating the mediating role of financial literacy on the relationship between women entrepreneurs’ behavioral biases and investment decision making. Gadjah Mada International Journal of Business, 25(1), 93-118.
Iram, T., Bilal, A. R., Ahmad, Z., & Latif, S. (2022). Building a conscientious personality is not sufficient to manage behavioral biases: An effective intervention for financial literacy in women entrepreneurs. Business Perspectives and Research, 22785337221114675.
Iram, T., Bilal, A. R., & Latif, S. (2024). Is awareness that powerful? women’s financial literacy support to prospects behaviour in prudent decision-making. Global Business Review, 25(5), 1356-1381.
Iram, T., Iqbal, N., Qazi, R., & Saleem, S. (2021). Nexus between financial literacy, investment decisions and heuristic biases of women entrepreneurs-A way forward for women empowerment. Pakistan Journal of Social Sciences, 41(1), 221-234.
J
am, F., Singh, S., Ng, B., & Aziz, N. (2016). Effects of uncertainty avoidance on leadership styles in malaysian culture. International Journal of Advance Business and Economics Research, 14(8), 7029-7045.
Jam, F. A., Haq, I. U., & Fatima, T. (2011). Phychological contract and job outcomes: Mediating role of affective commitment. In 1st international technology, education and environment conference.
Kappal, J. M., & Rastogi, S. (2020). Investment behaviour of women entrepreneurs. Qualitative Research in Financial Markets, 12(4), 485-504.
Kasoga, P. S. (2021). Heuristic biases and investment decisions: Multiple mediation mechanisms of risk tolerance and financial literacy—a survey at the Tanzania stock market. Journal of Money and Business, 1(2), 102-116.
Kumar, P., Pillai, R., Kumar, N., & Tabash, M. I. (2023). The interplay of skills, digital financial literacy, capability, and autonomy in financial decision making and well-being. Borsa Istanbul Review, 23(1), 169-183.
Mandell, L., & Klein, L. S. (2007). Motivation and financial literacy. Financial Services Review, 16(2), 105.
Putri, S., & Halmawati, H. (2020). Pengaruh financial literacy, representativeness bias, dan bias optimisme terhadap pengaruh investasi decision making. Jurnal Eksplorasi Akuntansi, 2(3), 2976-2991.
Rahim, D. A., Shah, D. M. H., Jan, D. S. U., & Aamir, D. A. (2020). Post COVID-19 influence of overconfidence bias on investment decisions of Pakistani stock investors. International Journal of Management, 11(9).
Rahman, M., & Gan, S. S. (2020). Generation Y investment decision: An analysis using behavioural factors. Managerial Finance, 46(8), 1023-1041.
Rasheed, M. H., Rafique, A., Zahid, T., & Akhtar, M. W. (2018). Factors influencing investor’s decision making in Pakistan: Moderating the role of locus of control. Review of Behavioral Finance, 10(1), 70-87.
Rasool, N., & Ullah, S. (2020). Financial literacy and behavioural biases of individual investors: Empirical evidence of Pakistan stock exchange. Journal of Economics, Finance and Administrative Science, 25(50), 261-278.
Renkl, A., Hilbert, T., & Schworm, S. (2009). Example-based learning in heuristic domains: A cognitive load theory account. Educational Psychology Review, 21(1), 67-78.
Rosca, E., Agarwal, N., & Brem, A. (2020). Women entrepreneurs as agents of change: A comparative analysis of social entrepreneurship processes in emerging markets. Technological forecasting and social change, 157, 120067.
Rozak, A., & Amalia, T. F. (2023). Study of heuristic bias and herding financial behavior model on sharia-based investment decisions for millennial generation. Enrichment: Journal of Management, 13(1), 504-513.
Sajjad, M., Kaleem, N., Chani, M. I., & Ahmed, M. (2020). Worldwide role of women entrepreneurs in economic development. Asia Pacific Journal of Innovation and Entrepreneurship, 14(2), 151-160.
Salahuddin, A., Mahmood, Q. K., & Ahmad, A. (2021). Breaking second glass ceiling: lived experiences of women entrepreneurs in Pakistan. Quality & Quantity, 1-12.
Salim, A., & Khan, S. (2020). The effects of factors on making investment decisions among omani working women. Accounting, 6(5), 657-664.
Shakeel, M., Yaokuang, L., & Gohar, A. (2020). Identifying the entrepreneurial success factors and the performance of women-owned businesses in Pakistan: The moderating role of national culture. Sage Open, 10(2), 2158244020919520.
Siregar, C. P., Putrie, S. G. S., & Leon, F. M. (2022). Pengaruh perilaku bias keuangan terhadap keputusan investasi dengan literasi keuangan sebagai variabel moderasi di jabodetabek. JMBI UNSRAT (Jurnal Ilmiah Manajemen Bisnis dan Inovasi Universitas Sam Ratulangi)., 9(1).
Sudani, F. S., & Pertiwi, I. F. P. (2022). Financial information analysis to minimize availability bias, representative bias, anchoring bias and adjustment bias, and overconfidence bias in ivestment decision making (study on investors at the sharia investment gallery of uin raden mas said. Social Science Studies, 2(5), 446-460.
Tatasari, T., & Witara, K. (2024). Analisis kemampuan kewirausahaan pengusaha perempuan pada komunitas umkm masyarakat kota di indonesia. Journal of Management and Social Sciences, 3(2), 01-13.
Tversky, A., & Kahneman, D. (1974). Judgment under Uncertainty: Heuristics and Biases: Biases in judgments reveal some heuristics of thinking under uncertainty. science, 185(4157), 1124-1131.
Tversky, A., & Kahneman, D. (1992). Advances in prospect theory: Cumulative representation of uncertainty. Journal of Risk and uncertainty, 5, 297-323.
ul Abdin, S. Z., Farooq, O., Sultana, N., & Farooq, M. (2017). The impact of heuristics on investment decision and performance: Exploring multiple mediation mechanisms. Research in International Business and Finance, 42, 674-688.
Waweru, N. M., Munyoki, E., & Uliana, E. (2008). The effects of behavioural factors in investment decision-making: A survey of institutional investors operating at the Nairobi Stock Exchange. International Journal of business and emerging markets, 1(1), 24-41.
Younas, K., & Rafay, A. (2021). Women entrepreneurship and financial literacy: The case of female borrowers in Pakistan. Iranian Economic Review, 25(3), 525-534.
Zeb, A., Amin, R. U., Kakakhel, S. J., & Ihsan, A. (2020). Impact of Financial Resources on Women’s Entrepreneurial Performance of Pakistan; Comparative Study of Registered and Non-Registered Women Entrepreneurs. City University Research Journal, 10(3), 376-394.
Adil, M., Singh, Y., & Ansari, M. S. (2022). How financial literacy moderate the association between behaviour biases and investment decision? Asian Journal of Accounting Research, 7(1), 17-30.
Adiputra, I. G. (2021). The influence of overconfidence, representative bias, and risk tolerance in investment decision making: Evidence on stock investors in Indonesia. Journal of Hunan University Natural Sciences, 48(4).
Aeni, N. N., Tubastuvi, N., Purwidianti, W., & Utami, R. F. (2024). Determinants of Millennial Investment Decision-Making in the Sharia Capital Market: A Comprehensive Review. Jurnal Ekonomi Dan Bisnis Airlangga Volume, 34(1).
Agarwal, . S. S., S. (2023). Behavioral biases and investment decision: A recent systematic literature review. International Journal of Statistics and Applied Mathematics, 8(4), 84–94.
Ahmad, M., & Shah, S. Z. A. (2020). Overconfidence heuristic-driven bias in investment decision-making and performance: Mediating effects of risk perception and moderating effects of financial literacy. Journal of Economic and Administrative Sciences, 38(1), 60-90.
Babajide, A. A., & Adetiloye, K. A. (2012). InvestorsâTM behavioural biases and the security market: An empirical study of the nigerian security market. Accounting and Finance Research, 1(1), 219-219.
Bagis, F. (2021). A case study of the performance of muslim msmes in purwokerto city. Jurnal Ilmiah Ekonomi Islam, 7(3), 1961-1969.
Bagis, F., Faridli, E. M., Awaludin, A., Umairoh, J. P. M., et al. (2024). Invigorate survival and resilience of msmes: The role of entrepreneurial knowledge, entrepreneurial motivation, and technological advancement. Journal of Social Entrepreneurship Theory and Practice, 3(2), 28.
Bertrand, M. (2020). Gender in the twenty-first century. In Aea papers and proceedings (Vol. 110, pp. 1–24).
Bhavani, M. (2020). A Study on problems of women entrepreneurs at Mysore district, India. Our Heritage, 68(1), 9183-9200.
Bongomin, G. O. C., Munene, J. C., Ntayi, J. M., & Malinga, C. A. (2018). Nexus between financial literacy and financial inclusion: Examining the moderating role of cognition from a developing country perspective. International Journal of Bank Marketing, 36(7), 1190-1212.
Dangol, J., & Manandhar, R. (2020). Impact of heuristics on investment decisions: The moderating role of locus of control. Journal of Business and Social Sciences Research, 5(1), 1-14.
Din, S. M. U., Mehmood, S. K., Shahzad, A., Ahmad, I., Davidyants, A., & Abu-Rumman, A. (2021). The impact of behavioral biases on herding behavior of investors in Islamic financial products. Frontiers in Psychology, 11, 600570.
Esubalew, A. A., & Raghurama, A. (2020). The mediating effect of entrepreneurs’ competency on the relationship between Bank finance and performance of micro, small, and medium enterprises (MSMEs). European Research on Management and Business Economics, 26(2), 87-95.
Fauzi, F., Antoni, D., & Suwarni, E. (2021). Mapping potential sectors based on financial and digital literacy of women entrepreneurs: A study of the developing economy. Journal of Governance and Regulation/Volume, 10(2).
Fitriana, R. (2023). Cultivating inclusivity: A comprehensive study of diversity, inclusion initiatives and employee satisfaction. Journal of administrative and business studies, 9(3), 146-162.
Gavrilakis, N., & Floros, C. (2022). The impact of heuristic and herding biases on portfolio construction and performance: The case of Greece. Review of Behavioral Finance, 14(3), 436-462.
Ghozali, I. (2018). Aplikasi analisis multivariete dengan program ibm spss 23. Badan penerbit universitas Diponegoro.
Goyal, K., & Kumar, S. (2021). Financial literacy: A systematic review and bibliometric analysis. International Journal of Consumer Studies, 45(1), 80-105.
Gujarati, D. (2011). Econometrics by example. Palgrave Macmillan.
Hasan, S. M. (2020). Female Entrepreneurship: Do urban centers ease out the challenge? An analysis for Pakistan. Urban studies and entrepreneurship, 163-179.
Huhmann, B. A. (2017). Literacy matters in marketing. International Journal of Bank Marketing, 35(5), 750-760.
Hunguru, P., Sibanda, V., & Tadu, R. (2020). Determinants of investment decisions: A study of individual investors on the Zimbabwe stock Exchange. Applied Economics and Finance, 7(5), 38-53.
Iram, T., Bilal, A. R., & Ahmad, Z. (2023). Investigating the mediating role of financial literacy on the relationship between women entrepreneurs’ behavioral biases and investment decision making. Gadjah Mada International Journal of Business, 25(1), 93-118.
Iram, T., Bilal, A. R., Ahmad, Z., & Latif, S. (2022). Building a conscientious personality is not sufficient to manage behavioral biases: An effective intervention for financial literacy in women entrepreneurs. Business Perspectives and Research, 22785337221114675.
Iram, T., Bilal, A. R., & Latif, S. (2024). Is awareness that powerful? women’s financial literacy support to prospects behaviour in prudent decision-making. Global Business Review, 25(5), 1356-1381.
Iram, T., Iqbal, N., Qazi, R., & Saleem, S. (2021). Nexus between financial literacy, investment decisions and heuristic biases of women entrepreneurs-A way forward for women empowerment. Pakistan Journal of Social Sciences, 41(1), 221-234.
J
am, F., Singh, S., Ng, B., & Aziz, N. (2016). Effects of uncertainty avoidance on leadership styles in malaysian culture. International Journal of Advance Business and Economics Research, 14(8), 7029-7045.
Jam, F. A., Haq, I. U., & Fatima, T. (2011). Phychological contract and job outcomes: Mediating role of affective commitment. In 1st international technology, education and environment conference.
Kappal, J. M., & Rastogi, S. (2020). Investment behaviour of women entrepreneurs. Qualitative Research in Financial Markets, 12(4), 485-504.
Kasoga, P. S. (2021). Heuristic biases and investment decisions: Multiple mediation mechanisms of risk tolerance and financial literacy—a survey at the Tanzania stock market. Journal of Money and Business, 1(2), 102-116.
Kumar, P., Pillai, R., Kumar, N., & Tabash, M. I. (2023). The interplay of skills, digital financial literacy, capability, and autonomy in financial decision making and well-being. Borsa Istanbul Review, 23(1), 169-183.
Mandell, L., & Klein, L. S. (2007). Motivation and financial literacy. Financial Services Review, 16(2), 105.
Putri, S., & Halmawati, H. (2020). Pengaruh financial literacy, representativeness bias, dan bias optimisme terhadap pengaruh investasi decision making. Jurnal Eksplorasi Akuntansi, 2(3), 2976-2991.
Rahim, D. A., Shah, D. M. H., Jan, D. S. U., & Aamir, D. A. (2020). Post COVID-19 influence of overconfidence bias on investment decisions of Pakistani stock investors. International Journal of Management, 11(9).
Rahman, M., & Gan, S. S. (2020). Generation Y investment decision: An analysis using behavioural factors. Managerial Finance, 46(8), 1023-1041.
Rasheed, M. H., Rafique, A., Zahid, T., & Akhtar, M. W. (2018). Factors influencing investor’s decision making in Pakistan: Moderating the role of locus of control. Review of Behavioral Finance, 10(1), 70-87.
Rasool, N., & Ullah, S. (2020). Financial literacy and behavioural biases of individual investors: Empirical evidence of Pakistan stock exchange. Journal of Economics, Finance and Administrative Science, 25(50), 261-278.
Renkl, A., Hilbert, T., & Schworm, S. (2009). Example-based learning in heuristic domains: A cognitive load theory account. Educational Psychology Review, 21(1), 67-78.
Rosca, E., Agarwal, N., & Brem, A. (2020). Women entrepreneurs as agents of change: A comparative analysis of social entrepreneurship processes in emerging markets. Technological forecasting and social change, 157, 120067.
Rozak, A., & Amalia, T. F. (2023). Study of heuristic bias and herding financial behavior model on sharia-based investment decisions for millennial generation. Enrichment: Journal of Management, 13(1), 504-513.
Sajjad, M., Kaleem, N., Chani, M. I., & Ahmed, M. (2020). Worldwide role of women entrepreneurs in economic development. Asia Pacific Journal of Innovation and Entrepreneurship, 14(2), 151-160.
Salahuddin, A., Mahmood, Q. K., & Ahmad, A. (2021). Breaking second glass ceiling: lived experiences of women entrepreneurs in Pakistan. Quality & Quantity, 1-12.
Salim, A., & Khan, S. (2020). The effects of factors on making investment decisions among omani working women. Accounting, 6(5), 657-664.
Shakeel, M., Yaokuang, L., & Gohar, A. (2020). Identifying the entrepreneurial success factors and the performance of women-owned businesses in Pakistan: The moderating role of national culture. Sage Open, 10(2), 2158244020919520.
Siregar, C. P., Putrie, S. G. S., & Leon, F. M. (2022). Pengaruh perilaku bias keuangan terhadap keputusan investasi dengan literasi keuangan sebagai variabel moderasi di jabodetabek. JMBI UNSRAT (Jurnal Ilmiah Manajemen Bisnis dan Inovasi Universitas Sam Ratulangi)., 9(1).
Sudani, F. S., & Pertiwi, I. F. P. (2022). Financial information analysis to minimize availability bias, representative bias, anchoring bias and adjustment bias, and overconfidence bias in ivestment decision making (study on investors at the sharia investment gallery of uin raden mas said. Social Science Studies, 2(5), 446-460.
Tatasari, T., & Witara, K. (2024). Analisis kemampuan kewirausahaan pengusaha perempuan pada komunitas umkm masyarakat kota di indonesia. Journal of Management and Social Sciences, 3(2), 01-13.
Tversky, A., & Kahneman, D. (1974). Judgment under Uncertainty: Heuristics and Biases: Biases in judgments reveal some heuristics of thinking under uncertainty. science, 185(4157), 1124-1131.
Tversky, A., & Kahneman, D. (1992). Advances in prospect theory: Cumulative representation of uncertainty. Journal of Risk and uncertainty, 5, 297-323.
ul Abdin, S. Z., Farooq, O., Sultana, N., & Farooq, M. (2017). The impact of heuristics on investment decision and performance: Exploring multiple mediation mechanisms. Research in International Business and Finance, 42, 674-688.
Waweru, N. M., Munyoki, E., & Uliana, E. (2008). The effects of behavioural factors in investment decision-making: A survey of institutional investors operating at the Nairobi Stock Exchange. International Journal of business and emerging markets, 1(1), 24-41.
Younas, K., & Rafay, A. (2021). Women entrepreneurship and financial literacy: The case of female borrowers in Pakistan. Iranian Economic Review, 25(3), 525-534.
Zeb, A., Amin, R. U., Kakakhel, S. J., & Ihsan, A. (2020). Impact of Financial Resources on Women’s Entrepreneurial Performance of Pakistan; Comparative Study of Registered and Non-Registered Women Entrepreneurs. City University Research Journal, 10(3), 376-394.
Published
2024-09-11
How to Cite
Heru Baskoro, Alviana Ajeng Hardinto, Dwi Kartika wahyuningsih, & Arif Rahman Kuswara. (2024). Behavioral Biases, Financial Literacy, and Investment Decisions: A Study on Women Entrepreneurs. Journal of Advanced Research in Social Sciences and Humanities, 9(3), 38-49. https://doi.org/10.26500/JARSSH-09-2024-0304
Section
Articles
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.
