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Financial Literacy And Mental Accounting Analysis Of Financial Decisions And Shopping Interests In The Covid-19 Pandemic Era

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  • Dita Rari Dwi, Dita Rari
  • Basuki, Teguh Iman

Abstract

The Covid 19 pandemic is a situation that illustrates the uncertainty of economic conditions nationally and globally and has an impact on how individuals should react to it in financial terms. Therefore, this study aims to examine the effect of financial literacy and mental accounting on financial decisions and spending interests in the COVID-19 pandemic situation based on prospect theory and behavioural life-cycle theory. The results of research on lecturers and staff respondents at STIE Equity Bandung - Indonesia, the SEM-PLS analysis results show that financial literacy and mental accounting have an effect on financial decisions, and only mental accounting has an effect on shopping interest. In terms of prospect theory, the research findings found that in pandemic situations, individuals generally behave in risk-aversion behaviour. Meanwhile, in the viewpoint of the behavioural life-cycle theory, individuals view money as current assets with precautionary reasons.

Suggested Citation

  • Dita Rari Dwi, Dita Rari & Basuki, Teguh Iman, 2022. "Financial Literacy And Mental Accounting Analysis Of Financial Decisions And Shopping Interests In The Covid-19 Pandemic Era," MPRA Paper 117298, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:117298
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    References listed on IDEAS

    as
    1. Shefrin, Hersh M & Thaler, Richard H, 1988. "The Behavioral Life-Cycle Hypothesis," Economic Inquiry, Western Economic Association International, vol. 26(4), pages 609-643, October.
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    More about this item

    Keywords

    Financial literacy; financial decisions; mental accounting; shopping interest; Financial literacy; financial decisions; mental accounting; shopping interest;
    All these keywords.

    JEL classification:

    • G0 - Financial Economics - - General
    • G02 - Financial Economics - - General - - - Behavioral Finance: Underlying Principles

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