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Effect of financial literacy on portfolio diversification at the Nairobi securities exchange market, Kenya

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  • Eveline Mwangi
  • Zipporah Onsomu

Abstract

This study sought to establish the effect of financial literacy on portfolio diversification at the Nairobi Securities Exchange. The study adopted a cross sectional survey research design. The population of the study constituted all individual investors who traded in stocks at the Nairobi Securities Exchange between June and July 2017. Primary data was used and a sample of 200 investors was considered for the study. Data was analyzed using regression analysis. The findings depicted that there was a significant effect of financial literacy on portfolio diversification among investors at the Nairobi securities exchange. However, age, education and income level which were control variables had insignificant influence on portfolio diversification. The study further recommends the need for the relevant government agencies to facilitate formulation of policies and programs to educate and train people on financial literacy. JEL classification numbers: G11Keywords: Financial literacy, portfolio diversification, demographics

Suggested Citation

  • Eveline Mwangi & Zipporah Onsomu, 2018. "Effect of financial literacy on portfolio diversification at the Nairobi securities exchange market, Kenya," Journal of Finance and Investment Analysis, SCIENPRESS Ltd, vol. 7(4), pages 1-3.
    • Handle: RePEc:spt:fininv:v:7:y:2018:i:4:f:7_4_3
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    References listed on IDEAS

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    1. van Rooij, Maarten & Lusardi, Annamaria & Alessie, Rob, 2011. "Financial literacy and stock market participation," Journal of Financial Economics, Elsevier, vol. 101(2), pages 449-472, August.
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    5. van Rooij, Maarten & Lusardi, Annamaria & Alessie, Rob, 2011. "Financial literacy and stock market participation," Journal of Financial Economics, Elsevier, vol. 101(2), pages 449-472, August.
    6. repec:use:tkiwps:2323 is not listed on IDEAS
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