The impact of financial literacy and knowledge on financial decisions

The idea of ​​an economic human being, a human being who makes rational financial decisions, is long outdated. Behavioral economists have repeatedly noted that people can be completely irrational when making financial decisions, but in these behavioral statements, two aspects remain relatively unrevealed: culture and financial literacy. Bart Frienz, Professor of Finance at The Open University, will explain these aspects in his inaugural lecture on Friday April 8, 2022 at 4 p.m.

Norms and Values ​​vs Ratio

First, the importance of culture is explained. Part of culture is the norms and values ​​that society considers important. These norms and values ​​influence the opinions and behavior of the people who are part of this community. Willingness to take risks and self-confidence, for example, are partly determined by culture. Thus, culture also influences financial decisions and behaviors, such as investments, corporate financial policy, or simply managing money at home. With sometimes “irrational” decisions taken as a result.

The influence of cultural generations is still noticeable in later times

In his introductory lecture, Bart Frienz provided many examples of the influence of culture on financial decisions, a subject he has studied for over ten years. In one of his studies in the United States, he demonstrated that this influence of culture persists for a very long time. There he discovered the historical roots of CEOs and CEOs, based on titles and databases. He found that after generations, the cultural influence of ancestral lands was still evident in their financial decisions.

Learn money management: is it useful?

Another reason for irrational financial decisions is financial literacy. Many people are not good at making money because they lack the knowledge and skills. Can you teach people about financial literacy, and if so, how? What if people had more knowledge and skills, would they approach money differently in the family – more logically? Frijns’ research pays particular attention to the self-employed. More and more people are starting their own business, even people who know very little about finance. What can you do to increase the financial knowledge of these self-employed people? What if you teach them more knowledge and skills: do they make wiser and more rational decisions?

Information about Bart Frien
Professor Dr. Dr. Bart Frenz (Heerlin, 1976) has joined the Open University as a professor of finance since April 2020. He obtained his doctorate. in 2004 from the University of Maastricht. After his doctoral research, he worked abroad for a longer period. In 2012 Bart Frienze became Professor of Finance at Auckland University of Technology (New Zealand), where he also directed the Auckland Center for Financial Research. He has more than 75 scientific publications to his credit and has organized numerous scientific conferences. He is co-founder and editor of the open access journal Applied Finance Letters, editor of the Journal of Future Markets (Wiley) and member of the editorial board of the Global Finance Journal (Elsevier). His research interests are broad, but at the Open University, his research focuses primarily on interdisciplinary topics such as financial literacy and the role of national culture in financial behavior. Effective May 1, Bart will assume the position of Dean of the School of Management Sciences.

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