Can Financial Literacy Explain Lack of Investment in Risky Assets in Japan?

Although household savings in Japan are among the highest in the world, investment in risky assets is still very low. This study examines whether financial literacy explains the lack of investment in risky assets in Japan. We use data from the Preference Parameter Study, a nationwide survey in Japan...

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Autores principales:	Mostafa Saidur Rahim Khan, Naheed Rabbani, Yoshihiko Kadoya
Formato:	article
Lenguaje:	EN
Publicado:	MDPI AG 2021
Materias:	financial literacy risky assets equity securities debt securities household investment financial market Environmental effects of industries and plants TD194-195 Renewable energy sources TJ807-830 Environmental sciences GE1-350
Acceso en línea:	https://doaj.org/article/1d2dc882118a4e1f91b8b66c9d5be16e
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spelling	oai:doaj.org-article:1d2dc882118a4e1f91b8b66c9d5be16e2021-11-25T19:02:31ZCan Financial Literacy Explain Lack of Investment in Risky Assets in Japan?10.3390/su1322126162071-1050https://doaj.org/article/1d2dc882118a4e1f91b8b66c9d5be16e2021-11-01T00:00:00Zhttps://www.mdpi.com/2071-1050/13/22/12616https://doaj.org/toc/2071-1050Although household savings in Japan are among the highest in the world, investment in risky assets is still very low. This study examines whether financial literacy explains the lack of investment in risky assets in Japan. We use data from the Preference Parameter Study, a nationwide survey in Japan that has been conducted by Osaka University. We use investment in stocks, investment trusts, futures/options, Japanese government bonds, government bonds of foreign countries, and foreign currency deposits as a proxy for investment in risky assets. Our results show that investment in risky assets is higher among financially literate people. Moreover, financial literacy has a significantly positive association with investment in risky assets even after controlling the demographic, socio-economic, and psychological factors. We check the robustness of the association between financial literacy and investment in risky assets by segregating investment in risky assets into investment in equity securities and investment in bonds and foreign currencies. Financial literacy is found to be associated with both investment in equity securities and investment in bonds and foreign currencies. Our results are also robust in terms of the endogeneity issue. The results imply that investment in risky assets in financial markets could be increased by introducing financial literacy programs at a mass level.Mostafa Saidur Rahim KhanNaheed RabbaniYoshihiko KadoyaMDPI AGarticlefinancial literacyrisky assetsequity securitiesdebt securitieshousehold investmentfinancial marketEnvironmental effects of industries and plantsTD194-195Renewable energy sourcesTJ807-830Environmental sciencesGE1-350ENSustainability, Vol 13, Iss 12616, p 12616 (2021)
institution	DOAJ
collection	DOAJ
language	EN
topic	financial literacy risky assets equity securities debt securities household investment financial market Environmental effects of industries and plants TD194-195 Renewable energy sources TJ807-830 Environmental sciences GE1-350
spellingShingle	financial literacy risky assets equity securities debt securities household investment financial market Environmental effects of industries and plants TD194-195 Renewable energy sources TJ807-830 Environmental sciences GE1-350 Mostafa Saidur Rahim Khan Naheed Rabbani Yoshihiko Kadoya Can Financial Literacy Explain Lack of Investment in Risky Assets in Japan?
description	Although household savings in Japan are among the highest in the world, investment in risky assets is still very low. This study examines whether financial literacy explains the lack of investment in risky assets in Japan. We use data from the Preference Parameter Study, a nationwide survey in Japan that has been conducted by Osaka University. We use investment in stocks, investment trusts, futures/options, Japanese government bonds, government bonds of foreign countries, and foreign currency deposits as a proxy for investment in risky assets. Our results show that investment in risky assets is higher among financially literate people. Moreover, financial literacy has a significantly positive association with investment in risky assets even after controlling the demographic, socio-economic, and psychological factors. We check the robustness of the association between financial literacy and investment in risky assets by segregating investment in risky assets into investment in equity securities and investment in bonds and foreign currencies. Financial literacy is found to be associated with both investment in equity securities and investment in bonds and foreign currencies. Our results are also robust in terms of the endogeneity issue. The results imply that investment in risky assets in financial markets could be increased by introducing financial literacy programs at a mass level.
format	article
author	Mostafa Saidur Rahim Khan Naheed Rabbani Yoshihiko Kadoya
author_facet	Mostafa Saidur Rahim Khan Naheed Rabbani Yoshihiko Kadoya
author_sort	Mostafa Saidur Rahim Khan
title	Can Financial Literacy Explain Lack of Investment in Risky Assets in Japan?
title_short	Can Financial Literacy Explain Lack of Investment in Risky Assets in Japan?
title_full	Can Financial Literacy Explain Lack of Investment in Risky Assets in Japan?
title_fullStr	Can Financial Literacy Explain Lack of Investment in Risky Assets in Japan?
title_full_unstemmed	Can Financial Literacy Explain Lack of Investment in Risky Assets in Japan?
title_sort	can financial literacy explain lack of investment in risky assets in japan?
publisher	MDPI AG
publishDate	2021
url	https://doaj.org/article/1d2dc882118a4e1f91b8b66c9d5be16e
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Can Financial Literacy Explain Lack of Investment in Risky Assets in Japan?

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