Economics & Sociology

ISSN: 2071-789X eISSN: 2306-3459 DOI: 10.14254/2071-789X
Index PUBMS: f5512f57-a601-11e7-8f0e-080027f4daa0
Article information
Title: Financial households’ efficacy, risk preference and saving behaviour: Lessons from lower-income households in Malaysia
Issue: Vol. 12, No 2, 2019
Published date: 06-2019 (print) / 06-2019 (online)
Journal: Economics & Sociology
ISSN: 2071-789X, eISSN: 2306-3459
Authors: Suhal Kusairi
Universiti Malaysia Terengganu

Nur Azura Sanusi
Universiti Malaysia Terengganu

Suriyani Muhamad
Universiti Malaysia Terengganu

Madihah Shukri
Universiti Malaysia Terengganu

Nadia Zamri
Universiti Malaysia Terengganu
Keywords: behavioural finance, saving behaviour, and psychometrics methods
DOI: 10.14254/2071-789X.2019/12-2/18
Index PUBMS: 2b1c3592-ad4e-11e9-bbfd-fa163e0fa1a0
Language: English
Pages: 301-318 (18)
JEL classification: D12, D14

Many government policies contain recommendations how to improve financial literacy, particularly through programmes of financial education and personal finance. However, personal financial management is not solely related to knowledge and financial literacy; individual confidence level in own financial abilities and household differences need to be considered in this regard. This paper investigates household financial efficacy through application of psychometric instruments, financial literacy, risk preference and demographic characteristics towards saving decision behaviour. The sample covers 404 households in Peninsular Malaysia and utilises the logistic and probit empirical model. The results show that household’s financial efficacy is essential for household’s saving decision behaviour and choice of saving instrument. Financial literacy, race, education and dependence ratio and location (rural or urban) of the household also play a role in saving instruments selection. More specifically, households with higher levels of financial efficacy are more likely to use bank-based or other lower risk saving instruments as compared to non-banking-based instruments.


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