Financial Self-Awareness: Who Knows What They Don't Know?

10 Pages Posted: 15 Jul 2019 Last revised: 25 Jan 2020

See all articles by William Bazley

William Bazley

University of Kansas

Yosef Bonaparte

University of Colorado at Denver - Department of Finance

George M. Korniotis

University of Miami; Miami Business School; University of Miami - Behavioral Decision Making Cluster

Date Written: January 23, 2020

Abstract

We examine the influence of financial literacy and perceptions of financial knowledge on households' financial risk-taking. Greater literacy and self-belief in one's literacy positively relate to equity ownership. However, self-awareness of illiteracy reduces participation by about 5%. We find that financial self-awareness is impacted by innate traits and environmental elements. Specifically, it is reduced by risk-seeking preferences and rising income but increases with income uncertainty. Overall, we demonstrate that accurate self-assessment has implications for individuals’ portfolio choices, which suggests policy implications for improving financial decision-making.

Keywords: stock market participation, financial literacy, self-awareness

JEL Classification: D14, G11

Suggested Citation

Bazley, William and Bonaparte, Yosef and Korniotis, George M., Financial Self-Awareness: Who Knows What They Don't Know? (January 23, 2020). University of Miami Business School Research Paper No. 3419779, Available at SSRN: https://ssrn.com/abstract=3419779 or http://dx.doi.org/10.2139/ssrn.3419779

William Bazley (Contact Author)

University of Kansas ( email )

3143 Capitol Federal Hall
1654 Naismith Drive
Lawrence, KS 66045
United States

Yosef Bonaparte

University of Colorado at Denver - Department of Finance ( email )

United States

George M. Korniotis

University of Miami ( email )

P.O. Box 248094
Coral Gables, FL 33124-6552
United States
305-284-5728 (Phone)

Miami Business School ( email )

University of Miami - Behavioral Decision Making Cluster ( email )

5250 University Drive
Coral Gables, FL 33124
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
79
Abstract Views
626
rank
377,208
PlumX Metrics