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Why does subjective financial literacy hinder retirement saving? The mediating roles of risk tolerance and risk perception

Linh Thi My Nguyen (School of Business and Management, RMIT University, Vietnam Campus, HCMC, Vietnam)
Phong Thanh Nguyen (UNSW Sydney, Sydney, Australia)
Quynh Nguyen Nhu Tran (School of Business, International University, Vietnam National University-HCMC, HCMC, Vietnam)
Thi Tuong Giang Trinh (School of Business, International University, Vietnam National University-HCMC, HCMC, Vietnam)

Review of Behavioral Finance

ISSN: 1940-5979

Article publication date: 30 April 2021

365

Abstract

Purpose

The purpose of this study is to examine a mechanism through which subjective financial literacy can exert negative effects on the retirement saving intention and behaviors, which has not been well understood in prior research. Particularly, the authors draw on the relevant risk literature to introduce financial risk tolerance and risk perception as important mediators that transfer subjective financial literacy into reduced retirement saving intention which in turn affects the saving behaviors.

Design/methodology/approach

The authors test the model with a sample of 347 adults using factor analysis and structural equation modeling.

Findings

Consistent with the notions about the negative side of subjective financial literacy, the authors find supporting evidence for the proposed indirect effects of financial literacy on retirement saving intention via risk tolerance and risk perception. In addition, the authors observe that an individual's retirement saving intention strongly predicts their retirement saving behaviors.

Originality/value

The study offers insights into the mechanisms that subjective financial knowledge might also inhibit individual's responsible financial behaviors (e.g. retirement saving).

Keywords

Citation

Nguyen, L.T.M., Nguyen, P.T., Tran, Q.N.N. and Trinh, T.T.G. (2021), "Why does subjective financial literacy hinder retirement saving? The mediating roles of risk tolerance and risk perception", Review of Behavioral Finance, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/RBF-03-2021-0036

Publisher

:

Emerald Publishing Limited

Copyright © 2021, Emerald Publishing Limited

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