The effect of financial literacy on behavioral finance: A research on financial investment professionals

The theory of classical economics, in which the individual is accepted as a rational entity, entered into another process with the emergence of 'Behavioral Finance' theory in 1979. Many studies have shown that while making investment decisions individuals act under the influence of their emotions instead of rationalizing them. In this study, it was aimed to create awareness for the wrong decisions made under the influence of the feelings of the individuals in financial markets. In this respect, it is possible for the individuals trading in the financial markets to minimize these mistakes. The low level of financial literacy which is seen among the causes that aggravate the possible effects of financial crises in the world has made this issue an important topic that countries have been working on in recent years. Increasing product diversity on financial markets, facilitating entry into these markets, and the widespread use of financial services by financial consumers, necessitates increase in individual financial literacy levels. In this context, this thesis study examines the relationship between financial literacy levels of investment professionals and behavioral finance prejudices. The behavioral finance and financial literacy scales used in this study, has been implemented to 194 people consists of investment professionals from many cities within the borders of Turkey both face to face and via e-mail. The answers to the financial literacy scale showed that the financial literacy levels of investment professionals are high. However, the high level of financial literacy has been found to reduce the biased attribution of self-attribution to behavioral financial bias and mistakes. Self-affirmation, cognitive conflict, and conservatism bias are seen to increase in the results of the analysis