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Financial literacy and portfolio diversification

Financial literacy and portfolio diversification We use a survey of individual investors disclosed by the Portuguese Securities Commission (CMVM) in May 2005 to study the impact of investors’ levels of financial literacy on portfolio diversification. We consider distinct aspects of financial literacy, and control for socioeconomic and behavioral differences among individual groups of investors. Our results suggest that investors’ educational levels and their financial knowledge have a positive impact on investor diversification. The information sources used by retail investors to gather information on markets and financial products also have a significant impact on the number of different assets included in a portfolio. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Quantitative Finance Taylor & Francis

Financial literacy and portfolio diversification

Quantitative Finance , Volume 10 (5): 14 – May 1, 2010
14 pages

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References (46)

Publisher
Taylor & Francis
Copyright
Copyright Taylor & Francis Group, LLC
ISSN
1469-7696
eISSN
1469-7688
DOI
10.1080/14697680902878105
Publisher site
See Article on Publisher Site

Abstract

We use a survey of individual investors disclosed by the Portuguese Securities Commission (CMVM) in May 2005 to study the impact of investors’ levels of financial literacy on portfolio diversification. We consider distinct aspects of financial literacy, and control for socioeconomic and behavioral differences among individual groups of investors. Our results suggest that investors’ educational levels and their financial knowledge have a positive impact on investor diversification. The information sources used by retail investors to gather information on markets and financial products also have a significant impact on the number of different assets included in a portfolio.

Journal

Quantitative FinanceTaylor & Francis

Published: May 1, 2010

Keywords: Applied finance; Behavioral finance; Empirical finance; European financial markets

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