The impact of financial culture and knowledge on financial decisions

The impact of financial culture and knowledge on financial decisions

The idea of ​​an economic human being, a human being who makes rational financial decisions, is long outdated. Behavioral economists have repeatedly noted that people can be completely irrational when making financial decisions, but in these behavioral statements, two aspects remain relatively unrevealed: culture and financial literacy. Bart Frienz, Professor of Finance at The Open University, will explain these aspects in his inaugural lecture on Friday, April 8, 2022 at 4pm.

Standards and Values ​​vs Ratio

First of all, the importance of culture is explained. Part of the culture is the norms and values ​​that society considers important. These norms and values ​​influence the opinions and behavior of the people who are part of that community. The willingness to take risks and self-confidence, for example, are partly culturally determined. Thus, culture also influences financial decisions and behaviour, such as investments, corporate financial policy or simply handling money at home. With sometimes “irrational” decisions made as a result.

The influence of cultural generations is still noticeable at a later time

In his introductory lecture, Bart Frienz provided numerous examples of the influence of culture on financial decisions, a topic he has been researching for more than ten years. In one of his studies in the United States, he demonstrated that this influence of culture persists for a very long time. There he discovered the historical roots of CEOs and CEOs, based on titles and databases. He found that after generations, the cultural influence of the ancestral lands was still evident in their financial decisions.

Learn Money Management: Does It Help?

Another reason for irrational financial decisions is financial literacy. Many people are not good at money because they do not have the knowledge and skills. Can you teach people financial literacy, and if so, how? And if people had more knowledge and skills, would they approach money in the family differently – in a more logical way? Frijns’ research pays extra attention to the self-employed. More and more people are starting their own businesses, even people who know very little about finance. What can you do to increase the financial knowledge of these self-employed people? And if you teach them more knowledge and skills: Do they make wiser, more rational decisions?

Information about Bart Frien
Professor Dr. Dr. Bart Frenz (Heerlin, 1976) has joined The Open University as Professor of Finance since April 2020. He received his Ph.D. in 2004 from Maastricht University. After his doctoral research, he worked abroad for a longer period. In 2012, Bart Frienze became Professor of Finance at Auckland University of Technology (New Zealand), where he also headed the Auckland Center for Financial Research. He has more than 75 scientific publications to his credit and has organized many scientific conferences. He is co-founder and editor of the open access journal Applied Finance Letters, editor-in-chief of the Journal of Future Markets (Wiley) and a member of the editorial board of the Global Finance Journal (Elsevier). His research interests are broad, but at The Open University his research focuses primarily on interdisciplinary topics such as financial literacy, and the role of national culture in financial behaviour. Effective May 1, Bart will assume the position of Dean of the School of Management Sciences.

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