Mediating Role of Mental Accounting in between Financial Cognition and Personal Financial Planning of Indian Households
25 Pages Posted: 1 Oct 2018
Date Written: September 30, 2018
Financial decisions are the most important and life-shaping decisions individual make in their life. The increasing body of literature evidences the role of the individual psychological influence in their financial decisions. More specifically, the role of mental accounting is established in the domain of individual behavior towards money and financial matters. The present study also explores the influence of cognitive components on individual financial decision making and named the antecedent as financial cognition. The study hypothesizes a significant association of financial cognition on mental accounting process and on personal financial planning of Indian households and also hypothesizes mediating role of mental accounting. Study uses partial least square structural equation modeling in SmartPLS 3.0, to analyze the data of 310 responses. The hypothesized relationships are established and a partial mediating role of mental accounting in between financial cognition and mental accounting process of Indian households is evidenced.
Keywords: Mental Accounting, Financial Cognition, Personal Financial Planning, Indian Households, Structural Equation Model
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