Overconfidence bias, Financial Literacy and Investment Decisions; moderation approach; a reflection from Small and Micro Enterprises in Nairobi County, Kenya

  • L. Jemutai Barno Moi University, P.O. Box 3900, Eldoret, Kenya
  • Josephat Cheboi Moi University, P.O. Box 3900, Eldoret, Kenya
  • Catherine Muganda Moi University, P.O. Box 3900, Eldoret, Kenya
Keywords: Financial Literacy, Overconfidence, Investment Decisions, Small and Micro Enterprises


This aimed aimed at determining moderating effect of financial literacy on the relationship between overconfidence bias and investment decisions among Small and Micro Enterprises. The study was anchored on competency theory. The study employed explanatory research design and positivist paradigm. The target population was 102,821 firm owners. A sample of 383 respondents was selected using stratified random sampling technique. The collected data was analysed using descriptive and inferential statistics. Findings from hierarchical linear regression revealed that financial literacy moderates the relationship between overconfidence and investment decisions (β = .42 >0.05, ∆ R2 = .07). The study recommends that firms should improve on financial literacy which improves the relationship between behavioural factors and investment. There existed a very strong relationship between the two variables as a result of financial literacy. This would enhance better investment decision improving financial performance of the SMEs.


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How to Cite
Barno, L., Cheboi, J., & Muganda, C. (2020, July 17). Overconfidence bias, Financial Literacy and Investment Decisions; moderation approach; a reflection from Small and Micro Enterprises in Nairobi County, Kenya. African Journal of Education,Science and Technology, 6(1), Pg 221-232. Retrieved from http://ajest.info/index.php/ajest/article/view/478