Towards Improving Households’ Investment Choices in Tanzania: Does Financial Literacy Really Matter?
Abstract
:1. Introduction
2. Literature Review
2.1. Theoretical Underpinnings
2.2. Empirical Literature
3. Methodology
3.1. Data
3.2. Variable Description
Financial Literacy
3.3. Analytical Design
- = Informal groups
- = Investment account
- = Household personal business
- = Agricultural investment
- is the error term
- is the information
- is the gender of the household head i
- is the highest education level attained by the household head i
- is the location or household head’s place of residence.
- is the employment status of the household head i
- denotes household head i’s income
- is the error term
4. Results and Discussions
Multivariate Analysis
5. Conclusions
Funding
Conflicts of Interest
References
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S/n | Variable | Description | Nature |
---|---|---|---|
1. | Investment Choices |
| Categorical variables; In each investment choice, the variable takes the value 1 if the choice is either Informal, Agriculture, Personal Business or Investment Account; Otherwise, the variable takes the value 0 for each respective choice. |
2. | Age (age) | Number of years lived by the household head | Continuous Variable |
3. | Gender (gender) | Sex of the head of the household | Dummy variable: It takes the value of 1 1 if the head of the household is male and 0 if female. |
4. | Income (hhincome) | Represents household annual income | Continuous Variable |
5. | Education level (edu) | Represents highest level of education reached by the head of the household.
| Categorical variables: 1 if no formal education, 0 otherwise; 1 if primary education, 0 otherwise; 1 if secondary education, 0 otherwise; 1 if tertiary education, 0 otherwise. |
6. | Employment (emp) | Represents an employment status of head of the household whether he/she is employed or not | It is a dummy variable with a value of 1 if the head of the household is employed and 0 otherwise. |
7. | Information (info) | Indicates the source of financial-related information obtained by head of the household whether formal or informal | This is a dummy variable with the value of 1 if the source of information regarding financial matters is formal and 0 for informal sources |
8. | Location (loc) | This denotes the head of the household’s place of residence | It is a dummy variable coded as 1 if urban and 0 if rural. |
VARIABLES | Informal Groups | Investment Account | Household Personal Business | Agricultural Investment |
---|---|---|---|---|
Financial literacy | −0.431 ** | 0.817 *** | 0.468 *** | 0.418 *** |
(0.202) | (0.130) | (0.101) | (0.112) | |
Location | −0.0711 *** | 0.133 *** | 0.0935 *** | −0.260 *** |
(0.0231) | (0.0154) | (0.0119) | (0.00996) | |
Gender | −0.0301 | −0.00656 | −0.0253 ** | 0.0382 *** |
(0.0238) | (0.0153) | (0.0116) | (0.0130) | |
Primary | −0.0764 *** | 0.155 *** | 0.0335 ** | −0.0922 *** |
(0.0286) | (0.0151) | (0.0138) | (0.0161) | |
Secondary | −0.236 *** | 0.280 *** | 0.0162 | −0.226 *** |
(0.0418) | (0.0288) | (0.0221) | (0.0221) | |
Tertiary | −0.320 *** | 0.617 *** | 0.0520 | −0.129 *** |
(0.0568) | (0.112) | (0.0344) | (0.0307) | |
Employment status | −0.161 *** | 0.227 *** | −0.264 *** | −0.0854 *** |
(0.0355) | (0.0375) | (0.0340) | (0.0194) | |
Information | −0.177 * | 0.122 | −0.0330 | −0.0180 |
(0.0986) | (0.0819) | (0.0576) | (0.0570) | |
Observations | 3812 | 3812 | 3812 | 3812 |
Wald Chi2 (9) | 195.03 | 525.32 | 178.70 | 915.03 |
Significance | 0.0000 | 0.0000 | 0.0000 | 0.0000 |
Pseudo R2 | 0.0831 | 0.1462 | 0.0724 | 0.2483 |
% correctly classified | 63.65 | 71.65 | 86.31 | 79.17 |
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Lotto, J. Towards Improving Households’ Investment Choices in Tanzania: Does Financial Literacy Really Matter? Int. J. Financial Stud. 2020, 8, 29. https://doi.org/10.3390/ijfs8020029
Lotto J. Towards Improving Households’ Investment Choices in Tanzania: Does Financial Literacy Really Matter? International Journal of Financial Studies. 2020; 8(2):29. https://doi.org/10.3390/ijfs8020029
Chicago/Turabian StyleLotto, Josephat. 2020. "Towards Improving Households’ Investment Choices in Tanzania: Does Financial Literacy Really Matter?" International Journal of Financial Studies 8, no. 2: 29. https://doi.org/10.3390/ijfs8020029
APA StyleLotto, J. (2020). Towards Improving Households’ Investment Choices in Tanzania: Does Financial Literacy Really Matter? International Journal of Financial Studies, 8(2), 29. https://doi.org/10.3390/ijfs8020029