Do financial ethics matter in risky asset investment of households? Evidence from Japan

• Published in: International Journal of Economic Policy Studies Vol. 18; no. 2; pp. 387 - 414
• Main Authors: Aman, Hiroyuki, Motonishi, Taizo, Yamane, Chisako
• Format: Journal Article
• Language: English
• Published: Singapore Springer Nature Singapore 01.08.2024; Springer Nature B.V
• Subjects: Asian Economics; Asset allocation; Asset management; Assets; Attitudes; Aversive; Bias; Christianity; Economic Policy; Economics; Economics and Finance; Ethics; Financial information; Financial literacy; Households; Hypotheses; Industrial Organization; Investments; Knowledge; Labor Economics; Money; Research Article; Securities markets; Transactions; Wealth; United States > US; Japan; Questionnaire survey; G50; G41; G11; Financial ethics; Risky investment; Household finance
• ISSN: 2524-4892; 1881-4387
• DOI: 10.1007/s42495-024-00134-2

In this study, we examine how financial ethics, defined as an aversive attitude toward financial matters, influence households’ risky asset investments. By using a questionnaire survey on households in Japan, financial ethics are measured on multiple dimensions: psychological attitude toward money, normative attitude toward economic transactions, and unwillingness to disclose financial information. Overall, evidence supports the financial ethics hypothesis that people with a high level of financial ethics are reluctant to invest in risky assets. Particularly, decisions to participate in the stock market are impaired by strong financial ethics. The hypothesis is partly supported for the percentage shares of stock holdings and investment in a broad class of risky assets. Furthermore, our mediation analysis reveals that financial ethics not only directly discourage investment but also have an indirect effect through reduced financial literacy.