Moderating effect financial literacy on behavioral biases in investment decisions of micro-entrepreneurs in selected cities of Cavite / by Benna Liza I. Gabuya, Cynthia O. Mendoza and Raven C. Olgina.

Thesis (BS Business Management--Financial Management) Cavite State University

Includes bibliographical references.

College of Economics, Management, and Development Studies (CEMDS)

GABUYA, BENNA LIZA I., MENDOZA, CYNTHIA O., OLGINA, RAVEN C., Moderating Effect of Financial Literacy on Behavioral Biases in Investment Decisions of Micro-entrepreneurs in Selected Cities of Cavite. Undergraduate Thesis. Bachelor of Science in Business Management major in Financial Management. Cavite State University Main Campus, Don Severino De Las Alas Campus, Indang Cavite. May 2017, Adviser: Glenda S. Pefia.

This research dealt with the moderating effect of financial literacy on behavioural biases in investment decisions of micro-entrepreneurs in selected cities of Cavite. A survey questionnaire is used to collect data from 248 micro-entrepreneurs in the most populated and industrial areas in Cavite, including Dasmarinas City, Bacoor City, Imus City and Trece Martires City.

The purpose of this study was to determine the moderating effect of financial literacy on behavioural biases in investment decisions of micro-entrepreneurs in selected cities of Cavite, covering the period of January to May 2017. Specifically, the study aimed to determine the socio-demographic profile of micro-entrepreneurs; identify the level of micro-entrepreneurs financial literacy subdivided to record keeping, saving, financing and budgeting; determine the level of behavioural biases of micro- entrepreneurs subdivided to herding bias, disposition effect and overconfidence bias;
determine the level of knowledge of micro-entrepreneurs on investment decision: determine the relationship between the socio-demographic profile of micro-entrepreneurs and behavioural biases; identify the effect of behavioural biases in investment decisions of micro-entrepreneurs; determine the financial literacy moderating effect in behavioural biases and investment decision of micro-entrepreneurs.

Descriptive and inferential method of analysis were used in presenting and analysing the data. Frequency count, percentage, mean, standard deviation and range were used in presenting the socio-demographic profile. Mean and standard deviation were used in determining the level of financial literacy and level of behavioural biases of micro-entrepreneurs. To determine the relationship between socio-demographic profile and behavioural biases as well as the effect of behavioural biases in investment decision of micro-entrepreneurs, point biserial correlation, Spearman rank and chi-square were used. Multiple regression was used to determine the moderating effect of financial literacy on behavioural biases and investment decision of micro-entrepreneurs.

The participant’s average age was 40 years, most of them were female, college graduate and married. Most of the participants were sole proprietors, have 2 employees and in business for 1 to 5 years.

The results show that the participants were moderately knowledgeable about financial literacy. The behavioural biases are somewhat influential in the decision making of the micro-entrepreneurs.

The findings also revealed that the participants have a very good level of investment decisions. Only age and number of employees have a significant relationship with herding bias.

The results also revealed that the respondents’ overconfidence bias has a positive effect in their investment decision.

Lastly, financial literacy has a positive moderating effect on the overconfidence bias in investment decisions of the micro-entrepreneurs.

Submitted copy to the University Library. 09-04-2018 T-7009