(searched for: Effect of Financial Literacy on Individual Savings Behavior; the Mediation Role of Intention to Saving)
Review of Behavioral Finance; https://doi.org/10.1108/rbf-03-2021-0036
Purpose The purpose of this study is to examine a mechanism through which subjective financial literacy can exert negative effects on the retirement saving intention and behaviors, which has not been well understood in prior research. Particularly, the authors draw on the relevant risk literature to introduce financial risk tolerance and risk perception as important mediators that transfer subjective financial literacy into reduced retirement saving intention which in turn affects the saving behaviors. Design/methodology/approach The authors test the model with a sample of 347 adults using factor analysis and structural equation modeling. Findings Consistent with the notions about the negative side of subjective financial literacy, the authors find supporting evidence for the proposed indirect effects of financial literacy on retirement saving intention via risk tolerance and risk perception. In addition, the authors observe that an individual's retirement saving intention strongly predicts their retirement saving behaviors. Originality/value The study offers insights into the mechanisms that subjective financial knowledge might also inhibit individual's responsible financial behaviors (e.g. retirement saving).
SHS Web of Conferences, Volume 56; https://doi.org/10.1051/shsconf/20185602005
Retirement planning has been the major concern for many years and is becoming an increasingly prominent issue faced by people nowadays. Retirement planning behavior is defined as people’s behavior towards their retirement planning. Therefore, attitudes toward retirement might lead to the formation of saving intentions to perform the retirement planning behavior. Past studies have indicated that planning has impacted on the saving behavior as well as to the portfolio choice. It is further emphasized that those planners who have retirement planning arrive close to retirement have a high level of wealth and show higher financial literacy than non-planners. The necessity of individuals to increase retirement savings had over a wide promoted, however, the understanding on individual motivation towards savings at higher rates still remains sparse. For those employees who are willing to retire from work, they should have enough savings to cover their needs during retirement. Unfortunately, findings from previous study showed that many people do not start to prepare and save for their retirement till very late in life-cycle, and do not manage to have adequate savings for their retirement. As a contribution to the literature, the present paper theoretically conceptualizes specifically only on the role of savings intention as a mediator between attitudes toward retirement and retirement planning behavior. Drawing on the theory of planned behavior, it is suggested that the behavioral intention is the closest predictor of behavior. Hence, the stronger the intention to perform a behavior, the greater the probability that the behavior should occur. The recommendations for future studies are proposed.