6533b827fe1ef96bd12863b5

RESEARCH PRODUCT

Measuring the financial capability of investors

subject

description

PurposeThe purpose of this paper is to provide further understanding of the financial capability of mutual fund investors, and compare internet and branch office investors. It seeks to examine mutual fund investors' abilities and awareness of the terms and risks of mutual fund investments using a novel measurement instrument.Design/methodology/approachAbility measurement techniques adapted from educational and psychological studies were applied in the paper. Empirical survey data were collected in Finland.FindingsThere were differences between different types of investors in terms of financial knowledge. The channel used by the investors in making investments differentiated the more knowledgeable internet investors from the less knowledgeable branch office investors.Research limitations/implicationsThe subjects of the study are the clients of a mutual fund company. Future research could concentrate on examining the consequences of financial knowledge. One interesting question is how the consumers understand their personal financial capability and its role in their lives.Practical implicationsThe measures and indicators of financial capability are important evaluative instruments for banks and financial corporations as well as for the authorities involved in evaluating investors' financial behaviour.Originality/valueThe ability measurement technique adapted from education and psychological research proved to be applicable in the field of financial capability measurement.