Effects of Financial Literacy on Personal Investments Decisions Among Bankers in Kenya

Abstract

There has always been the assumption that people working in the bank are knowledgeable on financial matters as they work in a financial institution. However, not everyone who works in the bank has background in finance as per the research findings. Further, financial literacy is key in people working in the bank to manage their resources to secure a future for themselves. The study objective was to understand the effect financial literacy and its utilization it in their personal investment decisions. Data collection was done through a descriptive study that entailed the issuance of questionnaires. The target population was bankers in Kenya and a sample was selected through the simple stratified random sampling. The study was done through the application of primary data through structured questionnaires. Out of 210 questionnaires issued, 183 were responded to indicating a good response rate. The research findings indicate that there is a positive relationship between financial literacy and levels of investments by bankers in Kenya. Other control variables including the risk appetite, the availability of capital and the growth opportunity have been seen to have an impact on the levels of investment. It is evident that people understand the importance of engaging in financial literacy classes. The findings of the study were that financial literacy informs the choice of investment by the bankers with most of the bankers shying away from risky investments. The bankers are seen to highly take up insurance due to understanding the importance of being covered for the future. The significant variable to the study was future growth opportunities implying that investment choices are highly related to the availability of opportunities to grow ones investment. The other variables financial literacy, risk profile and investment capital though having a positive relationship with investment decisions proved less significant. The study therefore highly recommends continuous education on various areas of investment and conducting of further studies into this areas