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The Influence of Financial Literacy, Risk Aversion and Expectations on Retirement Planning and Portfolio Allocation in Malaysia

The two objectives of this paper are to examine the effect of financial literacy, risk aversion and expectations on retirement planning; and, to investigate the effect of these antecedents on the retirement portfolio allocation. Data was collected via a self-administered questionnaire from a sample...

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Main Authors: Mahdzan, N.S., Mohd-Any, A.A., Chan, M.K.
Format: Article
Published: Gadjah Mada University 2017
Subjects:
HF Commerce
Business
Online Access:http://eprints.um.edu.my/19104/
http://dx.doi.org/10.22146/gamaijb.24441
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spelling my.um.eprints.191042018-09-05T02:35:25Z http://eprints.um.edu.my/19104/ The Influence of Financial Literacy, Risk Aversion and Expectations on Retirement Planning and Portfolio Allocation in Malaysia Mahdzan, N.S. Mohd-Any, A.A. Chan, M.K. HF Commerce Business The two objectives of this paper are to examine the effect of financial literacy, risk aversion and expectations on retirement planning; and, to investigate the effect of these antecedents on the retirement portfolio allocation. Data was collected via a self-administered questionnaire from a sample of 270 working individuals in Kuala Lumpur, Malaysia. Logistic and ordered probit regressions were employed to analyse the first and second objective, respectively. The results from the logistic regression indicate that future expectations significantly influence the probability of planning for retirement. Meanwhile, individuals with higher financial literacy and lower risk aversion are more likely to hold risky assets in their retirement portfolios. Subsequently, two-sample t-test and one-way ANOVA tests were conducted to further examine the differences in financial literacy, risk aversion and expectations, across demographic subgroups. The study contributes to the literature by holistically incorporating the behavioural aspects that affect retirement planning and by exploring an uncharted issue of retirement planning—namely, the retirement portfolio allocation. Gadjah Mada University 2017 Article PeerReviewed Mahdzan, N.S. and Mohd-Any, A.A. and Chan, M.K. (2017) The Influence of Financial Literacy, Risk Aversion and Expectations on Retirement Planning and Portfolio Allocation in Malaysia. Gadjah Mada International Journal of Business, 19 (3). pp. 267-289. ISSN 1411-1128 http://dx.doi.org/10.22146/gamaijb.24441 doi:10.22146/gamaijb.24441
institution Universiti Malaya
building UM Library
collection Institutional Repository
continent Asia
country Malaysia
content_provider Universiti Malaya
content_source UM Research Repository
url_provider http://eprints.um.edu.my/
topic HF Commerce
Business
spellingShingle HF Commerce
Business
Mahdzan, N.S.
Mohd-Any, A.A.
Chan, M.K.
The Influence of Financial Literacy, Risk Aversion and Expectations on Retirement Planning and Portfolio Allocation in Malaysia
description The two objectives of this paper are to examine the effect of financial literacy, risk aversion and expectations on retirement planning; and, to investigate the effect of these antecedents on the retirement portfolio allocation. Data was collected via a self-administered questionnaire from a sample of 270 working individuals in Kuala Lumpur, Malaysia. Logistic and ordered probit regressions were employed to analyse the first and second objective, respectively. The results from the logistic regression indicate that future expectations significantly influence the probability of planning for retirement. Meanwhile, individuals with higher financial literacy and lower risk aversion are more likely to hold risky assets in their retirement portfolios. Subsequently, two-sample t-test and one-way ANOVA tests were conducted to further examine the differences in financial literacy, risk aversion and expectations, across demographic subgroups. The study contributes to the literature by holistically incorporating the behavioural aspects that affect retirement planning and by exploring an uncharted issue of retirement planning—namely, the retirement portfolio allocation.
format Article
author Mahdzan, N.S.
Mohd-Any, A.A.
Chan, M.K.
author_facet Mahdzan, N.S.
Mohd-Any, A.A.
Chan, M.K.
author_sort Mahdzan, N.S.
title The Influence of Financial Literacy, Risk Aversion and Expectations on Retirement Planning and Portfolio Allocation in Malaysia
title_short The Influence of Financial Literacy, Risk Aversion and Expectations on Retirement Planning and Portfolio Allocation in Malaysia
title_full The Influence of Financial Literacy, Risk Aversion and Expectations on Retirement Planning and Portfolio Allocation in Malaysia
title_fullStr The Influence of Financial Literacy, Risk Aversion and Expectations on Retirement Planning and Portfolio Allocation in Malaysia
title_full_unstemmed The Influence of Financial Literacy, Risk Aversion and Expectations on Retirement Planning and Portfolio Allocation in Malaysia
title_sort influence of financial literacy, risk aversion and expectations on retirement planning and portfolio allocation in malaysia
publisher Gadjah Mada University
publishDate 2017
url http://eprints.um.edu.my/19104/
http://dx.doi.org/10.22146/gamaijb.24441
_version_ 1643690888737587200
score 13.211869

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