Financial Literacy and the Limits of Financial Decision-Making Edited by Tina Harrison Financial Literacy and the Limits of Financial Decision-Making This page intentionally left blank Financial Literacy and the Limits of Financial Decision-Making Edited by Tina Harrison University of Edinburgh Business School, UK Editor Tina Harrison University of Edinburgh UK ISBN 978-3-319-30885-2 ISBN 978-3-319-30886-9 (eBook) DOI 10.1007/978-3-319-30886-9 © The Editor(s) (if applicable) and the Author(s) 2016 The author(s) has/have asserted their right(s) to be identified as the author(s) of this work in accordance with the Copyright, Designs and Patents Act 1988 This work is subject to copyright All rights are solely and exclusively licensed by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed The use of general descriptive names, registered names, trademarks, service marks, etc in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use The publisher, the authors and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication Neither the publisher nor the authors or the editors give a warranty, express or implied, with respect to the material contained herein or for any errors or omissions that may have been made Printed on acid-free paper This Palgrave Macmillan imprint is published by Springer Nature The registered company is Springer International Publishing AG Switzerland Contents List of Figures and Tables vii Notes on Contributors x Introduction Tina Harrison 1 Cognitive Drivers of Suboptimal Financial Decisions: Implications for Financial Literacy Campaigns Hooman Estelami 10 A Comprehensive Model of Information Search and Processing Behaviour of Mutual Fund Investors Sanjay Kumar Mishra and Manoj Kumar 26 The Information Search Process of Socially Responsible Investors Jonas Nilsson, Anna-Carin Nordvall and Sofia Isberg 57 Do Investors Show an Attentional Bias toward Past Performance? An Eye-Tracking Experiment on Visual Attention to Mutual Fund Disclosures in Simplified Fund Prospectuses Andreas Hüsser and Werner Wirth The Role of Creative Strategy, Ad Disclosure and Regulatory Focus in Investors’ Decision Making: An Experimental Investigation Taejun (David) Lee, TaiWoong Yun and Kwang Seok Han Socialization and Processing Effects on Comprehension of Credit Card Advertisement Disclosures Alex Wang Consumer Rationality/Irrationality and Financial Literacy in the Credit Card Market: Implications from an Integrative Review Na Shen Psycho-Social Factors Impacting Credit Acquisition and Use by College Students James W Peltier, Nadia Pomirleanu, Michael Endres and Ereni Markos v 77 103 135 155 177 vi Contents Factors Affecting Investment Intentions: A Consumer Behaviour Perspective Kang Li Lim, Geoffrey N Soutar and Julie A Lee 201 10 Factors Influencing Investor Choice of Retirement Funds Allan Lee, Yingzi Xu and Kenneth F Hyde 224 11 The Customer Orientation of Financial Advisers Diane Halstead, Michael A Jones, Vance P Lesseig and Thomas I Smythe 246 12 Gender Stereotyping in Financial Advisors’ Assessment of Customers Inga-Lill Söderberg 260 13 Financial Literacy and Financial Literacy Programmes in Australia Andrew C Worthington 281 14 Assessment of Behavioural Outcomes of Financial Education Workshops on Financial Behaviour of the Participants: An Experimental Study Harsha Vijaykumar Jariwala and Mahendra S Sharma 302 15 Fraud and Its PREY: Conceptualising Social Engineering Tactics and Its Impact on Financial Literacy Outcomes Jacqueline M Drew and Cassandra Cross 325 Index 341 List of Figures and Tables Figures 2.1 Proposed comprehensive model of information search and processing behaviour of MF investors 30 2.2 Proposed model with measurement items 42 2.3 The structural equation model with standardized estimates 46 3.1 The theoretical model of the study 59 4.1 Overview of the treatment conditions 85 5.1 Creative strategy × regulatory focus → Attitude toward financial product 117 5.2 Creative strategy × regulatory focus → Purchase intention 118 5.3 Ad disclosure × regulatory focus → Attitude toward financial product 119 5.4 Ad disclosure × regulatory focus → Purchase intention 120 5.5 Creative strategy × ad disclosure × regulatory focus → Attitude toward financial product (a) Ads without disclosures; (b) Ads with disclosures 123 Creative strategy × ad disclosure × regulatory focus → Purchase intention (a) Ads without disclosures; (b) Ads with disclosures 124 5.6 5.A1 (a) Informational ad without ad disclosure; (b) Informational ad with ad disclosure 133 5.A2 (a) Transformational ad without ad disclosure; (b) Transformational ad with ad disclosure 134 7.1 Research framework on consumer behavior in the credit card market 166 8.1 Proposed psycho-social credit card model 180 9.1 An investment intentions model 208 10.1 Codes and themes emerging from focus group meetings 232 10.2 Factors influencing KiwiSaver fund choice 234 15.1 PREY framework 332 vii viii List of Figures and Tables Tables 2.1 Demographic profile of the study respondents (N = 268) 37 2.2 Dimensionality and reliability of subjective knowledge (SK) construct (N = 268) 38 2.3 Dimensionality and reliability of PPR construct (N = 268) 39 2.4 Dimensionality and reliability of purchase decision involvement (PDI) construct (N = 268) 40 2.5 Dimensionality and reliability of DIS construct (N = 268) 40 2.6 Dimensionality and reliability of DIP construct (N = 268) 41 2.7 Results of discriminant validity test 44 2.8 Means, standard deviations and intercorrelations among study variables 45 2.9 Fit statistics for hypothesized model 47 3.1 The independent and dependent variables used in the study 65 3.2 T-tests on the influence of the different types of involvement and knowledge on the types of information used by socially responsible investors 68 3.3 T-tests on the influence of the different types of involvement and knowledge on the sources used by socially responsible investors 69 T-tests on the influence of the different types of involvement and knowledge on the amount of information gathered prior to investing in SRI profiled mutual funds 71 4.1 Between-subjects tests 90 4.2 Estimated marginal means (EMMEANS) and standard errors (SE) 91 Indirect effects of past performance on purchase intentions through mediators 93 3.4 4.3 5.1 Summary statistics and correlations among study variables 115 5.2 Moderated multiple regressions results 116 5.3 ANOVA results of the median split of regulatory focus 121 6.1 Multiple regression equation 143 List of Figures and Tables ix 6.2 Multivariate tests 143 6.3 Tests of between-subjects effects 144 6.4 Means (standard deviations) of dependent measures 145 7.1 Statistics on the references 158 8.1 Review of the literature 181 8.2 Respondent profile 187 8.3 Factor loadings of survey items on six psychosocial factors and coefficient α’s 189 8.4 Multivariate regression results: Number of credit cards and total credit card debt 192 Review of hypotheses: Number of credit cards and total credit card debt 193 9.1 The constructs’ measurement properties 211 9.2 The alternative structural model’s standardised path coefficients 213 9.3 Direct, indirect and total effects of the alternative model 214 9.4 Standardised indirect and direct effects (probabilities) 216 9.A1 The constructs used in the study 223 11.1 Customer orientation scale items 251 11.2 Sample characteristics 253 11.3 Customer orientation by financial adviser demographics 254 11.4 Importance of fund factors and satisfaction with performance by level of customer orientation 257 12.1 Dependent variables 268 12.2 Results of independent samples t-test 269 12.3 Results of two-way between-groups analyses of variance (ANOVA) 271 8.5 12.A1 The chosen attitudinal statements from the questionnaire 280 14.1 Respondents’ profile 311 14.2 Paired samples statistics 313 14.3 Paired samples statistics for financial behaviour 315 14.A1 Codebook for 22 financial behaviour statements 323 .. .Financial Literacy and the Limits of Financial Decision- Making This page intentionally left blank Financial Literacy and the Limits of Financial Decision- Making Edited by Tina... financial literacy and the limits of financial decision- making The articles in this collection take account of the following factors that exert an impact on financial literacy and effective financial. .. critique of the process of measuring, assessing and understanding financial literacy and the purpose, design and evaluation of the financial literacy programmes in place and concludes that there