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The Impact of Sustainable Finance Literacy on Investment Decisions

Author

Listed:
  • Massimo Filippini

    (ETH Zürich; University of Lugano - Faculty of Economics)

  • Markus Leippold

    (University of Zurich; Swiss Finance Institute)

  • Tobias Wekhof

    (ETH Zürich - CER-ETH - Center of Economic Research at ETH Zurich)

Abstract

This paper studies the impact of an educational program on Sustainable Finance Literacy (SFL) and the impact of this program on sustainable investment decisions. For this purpose, we conducted a randomized controlled trial (RCT) and an incentivized choice experiment. Our findings demonstrate that the SFL educational treatment significantly improves literacy while considering the influence of priming. Participants exposed to the SFL program were more likely to invest in highly sustainable funds by 6 percentage points and less likely to choose less sustainable options with magnitudes between 3 and 2.5 percentage points. The treatment effects increased by up to one half among investors with pre-existing green attitudes. In addition, we provide suggestive evidence that a higher SFL leads to more accurate sustainability perceptions and reduces the tendency to chase high past returns.

Suggested Citation

  • Massimo Filippini & Markus Leippold & Tobias Wekhof, 2024. "The Impact of Sustainable Finance Literacy on Investment Decisions," Swiss Finance Institute Research Paper Series 24-57, Swiss Finance Institute.
    • Handle: RePEc:chf:rpseri:rp2457
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    More about this item

    Keywords

    Sustainable Finance Literacy; RCT; text analysis; household finance;
    All these keywords.

    JEL classification:

    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • G53 - Financial Economics - - Household Finance - - - Financial Literacy
    • C83 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Survey Methods; Sampling Methods

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