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Financial literacy and investment decisions of UAE investors

Author

Listed:
  • Hussein A. Hassan Al‐Tamimi
  • Al Anood Bin Kalli

Abstract

Purpose - The purpose of this paper is to assess the financial literacy of the UAE individual investors who invest in the local financial markets. In addition, it examines the relationship between financial literacy and the influence of the factors that affect the investment decision. Design/methodology/approach - A modified questionnaire has been developed divided into three parts. The first part covers demographic variables. The second part identifies 37 factors affecting the investment decision of the UAE investors. The third part is devoted to financial literacy using exam‐type questions of true or false and includes 18 questions. A convenient sample of 290 of UAE national investors is used. Findings - The results indicate that the financial literacy of UAE investors is far from the needed level. The financial literacy level is found to be affected by income level, education level, and workplace activity. High‐income respondents hold high educational degrees, and those who work in the field of finance/banking or investment had as expected a higher financial literacy level than others. Whereas, financial illiteracy exists regardless of the age of the respondents. A significant difference in the level of financial literacy was found as well between the respondents according to their gender. Specifically, women have a lower level of financial literacy than men. Finally, the results indicate that there is a significant relationship between financial literacy and investment decisions. The most influencing factor that affects the investment decision is religious reasons and the least affecting factor is rumors. Originality/value - The current study is considered the first of its kind conducted on the UAE. To the best of our knowledge, no such studies have been conducted regarding measuring financial literacy in the UAE or the relation between financial literacy level and the factors that influence the investment decisions.

Suggested Citation

  • Hussein A. Hassan Al‐Tamimi & Al Anood Bin Kalli, 2009. "Financial literacy and investment decisions of UAE investors," Journal of Risk Finance, Emerald Group Publishing Limited, vol. 10(5), pages 500-516, November.
    • Handle: RePEc:eme:jrfpps:15265940911001402
    DOI: 10.1108/15265940911001402
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    Citations

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    Cited by:

    1. Gallucci, Carmen & Giakoumelou, Anastasia & Santulli, Rosalia & Tipaldi, Riccardo, 2023. "How financial literacy moderates the relationship between qualitative business information and the success of an equity crowdfunding campaign: Evidence from Mediterranean and Gulf Cooperation Council ," Technology in Society, Elsevier, vol. 75(C).
    2. Shakira MUKHTAR & Anisa JAN, 2023. "Decoding financial literacy's mediating role: analyzing the influence of biopsychosocial indicators on financial satisfaction and risk tolerance among millennial investors," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania / Editura Economica, vol. 0(4(637), W), pages 219-242, Winter.
    3. Feby Yanti & Endri Endri, 2024. "Financial Behavior, Overconfidence, Risk Perception and Investment Decisions: The Mediating Role of Financial Literacy," International Journal of Economics and Financial Issues, Econjournals, vol. 14(5), pages 289-298, September.
    4. Basha, Shabeen Afsar & Bennasr, Hamdi & Goaied, Mohamed, 2023. "Financial literacy, financial development, and leverage of small firms," International Review of Financial Analysis, Elsevier, vol. 86(C).
    5. Mukhtar Shakira & Jan Anisa & Zahoor Adil, 2023. "Beyond the Big Five: How Dynamic Personality Traits Predict Financial Risk Tolerance?," Acta Universitatis Sapientiae, Economics and Business, Sciendo, vol. 11(1), pages 93-114, October.
    6. Md. Saidul Islam & Md. Akash & Shake Farhan & Md Jahidul Islam Jahid & Md.Omit Hasan Ovi, 2023. "Understanding the Factors that Influence Financial Literacy in Small Businesses: Evidence from Bangladesh," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 7(12), pages 492-505, December.
    7. Norzitah Abdul Karim & Zainora Ab Wahid & Syahrul-Niza Kamarul Ariffin & Sharifah Heryati Syed Nor & Ahmad Najib Nazlan & Salina Kassim, 2023. "Financial Literacy among University Students and its Implications towards Financial Scams," Information Management and Business Review, AMH International, vol. 15(3), pages 124-128.

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