SpringerLink
Log in

Does self-control moderate financial literacy and savings behavior relationship? A case of micro and small enterprise owners

  • Published:
Current Psychology Aims and scope Submit manuscript

Abstract

It is vital to understand Saving Behavior at an individual level, since an individual member of society initiates capital accumulation / mobilization. Micro and Small Enterprises (MSEs) have been provided credit facilities solely as a source of financing for a long time, but there has been increasing concern lately that MSEs require not only credit but also savings that have risen to the top of the financial services for this market. Micro and small business owners, however, often struggle to save, even if they have surpluses. This is attributed to the lack of incorporation of cognitive factors, financial indiscipline and lack of vision. This study examines the moderating effect of self-control on the relationship between financial literacy and saving behavior using cross-sectional data from 395 micro and small business owners in Kampala, Uganda.The study used a quantitative, positivist research approach. Process macro was used as a statistical tool for analyzing the data gathered using a questionnaire. The study was guided by the social cognitive theory. Results indicate that both financial literacy and self-control significantly predict saving behavior. Besides, the relationship between financial literacy and saving behavior is moderated by self-control. Furthermore, the findings suggest that individuals with low self-control require a lot of financial literacy in order to have a positive effect on their savings behavior relative to those with high self-control because even though they go through financial literacy training, its effect on savings behavior would be negligible. This means that first evaluation of their self-control levels is required before individuals are taken for financial literacy training. Therefore it is advised to determine the self-control of an individual before they are taken for training in financial literacy.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Subscribe and save

Springer+ Basic
EUR 32.99 /Month
  • Get 10 units per month
  • Download Article/Chapter or Ebook
  • 1 Unit = 1 Article or 1 Chapter
  • Cancel anytime
Subscribe now

Buy Now

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Fig. 1
Fig. 2

Similar content being viewed by others

References

  • Abdel-Khalek, A. M. (2016). Introduction to the psychology of self-esteem. Self-esteem Perspectives, influences, and improvement strategies, 1–23.

  • Abebe, G., Tekle, B., & Mano, Y. (2016). Changing saving and investment behavior: The impact of financial literacy training and reminders on Micro-business CSAE working paper series 2016–08. University of Oxford: Centre for the Study of African Economies,.

  • Alwi, S., Amir Hashim, I. Z., & Ali, M. S. (2015). Factors affecting savings habits within millennials in Malaysia: Case study on students of Taylor’s university. Paper presented at the conference on global business, Economics, Finance and Social Sciences.

  • Ameliawati, M., & Setiyani, R. (2018). The influence of financial attitude, financial socialization, and financial experience to financial management behavior with financial literacy as the mediation variable. KnE Social Sciences, 3, 811–832.

    Article  Google Scholar 

  • Ariffin, M. R., Sulong, Z., & Abdullah, A. (2017). Students’ perception towards financial literacy and saving behavior. World Applied Sciences Journal, 35(10), 2194–2201.

    Google Scholar 

  • Arnone, W. J. (2004). Educating pension plan participants, pension research council working paper. Philadelphia: The Wharton School,University of Pennsylvania.

  • Asare, E., Segarra, E., Gertrude, N., & Asiseh, F. (2018). Explaining the saving behavior of households’ in Ethiopia. Africa Applied Economics and Finance, 5(2), 143–151.

    Article  Google Scholar 

  • Atandi, F., Bwisa, H., & Sakwa, M. (2017). Improving Savings Mobilization of Micro and Small Enterprises through Entrepreneurial Financial Literacy. International Journal of Academic Research in Business and Social Sciences, 7(2), 386–403.

    Google Scholar 

  • Atkinson, A., & Messy, F. A. (2012). Measuring financial literacy.

  • Avdeenko, A., Bohne, A., & Frölich, M. (2019). Linking savings behavior, confidence and individual feedback: A field experiment in Ethiopia. Journal of Economic Behavior & Organization, 167, 122–151.

    Article  Google Scholar 

  • Bamforth, J., Jebarajakirthy, C., & Geursen, G. (2017). Undergraduates’ responses to factors affecting their money management behaviour: Some new insights from a qualitative study. Young Consumers.

  • Bandura, A. (1989). Human agency in social cognitive theory. American psychologist, 44(9), 1175. 

  • Bandura, A. (1990). Perceived self-efficacy in the exercise of control over AIDS infection. Evaluation and Program Planning, 13(1), 9–17.

    Article  Google Scholar 

  • Bandura, A. (1997). Self-efficacy: Toward a unifying theory of behavioral change. Psychological Review, 84(2), 191.

    Article  Google Scholar 

  • Bandura, A. (2009). Social cognitive theory of mass communication media effects. Routledge.

  • Bandura, A. (2014). Social cognitive theory of moral thought and action handbook of moral behavior and development (pp. 69-128). Psychology press.

  • Bandura, A. (2005). The evolution of social cognitive theory. Great minds in management, 9–35.

  • Baron, R. M., & Kenny, D. A. (1986). The moderator-mediator variable distinction in social psychological research: Conceptual, strategic and statistical considerations. Journal of Personality and Social Psychology, 51(6), 1173–1182.

    Article  PubMed  Google Scholar 

  • Beckmann, E. (2013). Financial literacy and household savings in Romania. Numeracy, 6(2), 9.

    Article  Google Scholar 

  • Bernheim, B. D., Ray, D., & Yeltekin, S. (2015). Poverty and self-control. Econometrica, 83(5), 1877–1911.

    Article  Google Scholar 

  • Biljanovska, N., & Palligkinis, S. (2018). Control thyself: Self-control failure and household wealth. Journal of Banking & Finance, 92, 280–294.

    Article  Google Scholar 

  • Chaulagain, R. P. (2017). Relationship between financial literacy and behavior of small borrowers. NRB Economic Review, 29(3), 33–53.

    Article  Google Scholar 

  • Chaulagain, R. P. (2019). Financial literacy and behavior of small borrowers in Nepal.

  • Chen, H., & Volpe, R. P. (1998). An analysis of personal financial literacy among college students. Financial Services Review, 7(2), 107–128.

    Article  Google Scholar 

  • Choi, J. J., Laibson, D., & Madrian, B. C. (2011). $100 bills on the sidewalk: Suboptimal investment in 401 (k) plans. Review of Economics and statistics, 93(3), 748–763.

    Article  PubMed  Google Scholar 

  • Chowa, G. A., & Despard, M. R. (2014). The influence of parental financial socialization on youth’s financial behavior: Evidence from Ghana. Journal of Family and Economic Issues, 35(3), 376–389.

    Article  Google Scholar 

  • Dangol, J., & Maharjan, S. (2018). Parental and peer influence on the saving behavior of the youth. International Research Journal of Management Science, 3, 42–63.

    Article  Google Scholar 

  • De Ridder, D. T., Lensvelt-Mulders, G., Finkenauer, C., Stok, F., & Baumeister, R. (2012). Taking stock of self-control: A meta-analysis of how trait self-control relates to a wide range of behaviors. Personality and Social Psychology Review, 16(1), 76–99.

    Article  PubMed  Google Scholar 

  • Delafrooz, N., & Paim, L. H. (2011). Determinants of saving behavior and financial problem among employees in Malaysia. Australian Journal of Basic and Applied Sciences, 5(7), 222–228.

    Google Scholar 

  • Denton, F., Fretz, D., & Spencer, B. (2011). Independence and economic security in old age [press release].

  • Esenvalde, I. (2011). Psychological predictors of savings behavior: Contrasting the impact of optimism and burnout on self-control, achievement motivation and savings behavior Los Angeles: Alliant International University.

  • Esiebugie, U. (2018). Financial literacy and performance of small and medium scale Enterprises in Benue State , Nigeria, . 2(04), 65–79.

  • Fang, W. T., Ng, E., Wang, C. M., & Hsu, M. L. (2017). Normative beliefs, attitudes, and social norms: People reduce waste as an index of social relationships when spending leisure time. Sustainability, 9(10), 1696.

    Article  Google Scholar 

  • Fujita, K., & Han, H. A. (2009). Moving beyond deliberative control of impulses: The effect of construal levels on evaluative associations in self-control conflicts. Psychological Science, 20(7), 799–804.

    Article  PubMed  Google Scholar 

  • Fünfgeld, B., & Wang, M. (2009). Attitudes and behaviour in everyday finance: Evidence from Switzerland. International Journal of Bank Marketing.

  • Griesdorn, T., Lown, J. M., DeVaney, S. A., Cho, S. H., & Evans, D. (2014). Association between Behavioral Life-Cycle Constructs and Financial Risk Tolerance of Low-to Moderate-Income Households. Journal of Financial Counseling and Planning, 25.

  • Hayes, A. F. (2012). PROCESS: A versatile computational tool for observed variable mediation, moderation, and conditional process modeling.

  • Hayes, A. F. (2018). Partial, conditional, and moderated mediation: Quantification, inference, and interpretation. Communication Monographs, 85(1), 4–40.

    Article  Google Scholar 

  • Ibrahim, D., Harun, R., & Isa, Z. M. (2009). A Study on Financial Literacy of Malaysian Degree Students/Une Étude Sur Les Connaissances Financières Des Étudiants Malaisiens. Cross-cultural communication, 5(4), 51.

    Google Scholar 

  • Jamal, A. A. A., Ramlan, W. K., Karim, M. A., & Osman, Z. (2015). The effects of social influence and financial literacy on savings behavior: A study on students of higher learning institutions in Kota Kinabalu, Sabah. International Journal of Business and Social Science, 6(11), 110–119.

    Google Scholar 

  • Kaberuka, W., & Namubiru, R. (2014). The effect of remittances on gross domestic savings in Uganda. International Journal of Business Management and Administration, 3(2), 29–39.

    Google Scholar 

  • Khatun, M. (2018). Effect of financial literacy and parental socialization on students savings behavior of Bangladesh. International journal of scientific and research publications (IJSRP), 8. https://doi.org/10.29322/IJSRP.8.12.2018.p8440.

  • Kim, G. J., & Hanna, S. D. (2017). Do self-control measures affect saving behavior?

  • Kostakis, I. (2012). Households’ saving behavior in Greece corresponding countermeasures in financial crisis. International Journal of Economic Practices and Theories, 2(4), 253–265.

    Google Scholar 

  • Kubilay, B., & Bayrakdaroglu, A. (2016). An empirical research on investor biases in financial decision-making, financial risk tolerance and financial personality. International Journal of Financial Research, 7(2), 171.

    Article  Google Scholar 

  • Kumar, S., Watung, C., Eunike, J., & Liunata, L. (2017). The influence of financial literacy towards financial behavior and its implication on financial decisions: A survey of President University students in Cikarang-Bekasi. Firm Journal of Management Studies, 2(1).

  • Lajuni, N., Abdullah, N., Bujang, I., & Yacob, Y. (2018). Examining the Predictive Power of Financial Literacy and Theory of Planned Behavior on Intention to Change Financial Behavior. 7(3), 60–66.

  • Letkiewicz, J. C., & Fox, J. J. (2014). Conscientiousness, financial literacy, and asset accumulation of young adults. Journal of Consumer Affairs, 48(2), 274–300.

    Article  Google Scholar 

  • Lindner, C., Nagy, G., & Retelsdorf, J. (2015). The dimensionality of the brief self-control scale-an evaluation of unidimensional and multidimensional applications. Personality and Individual Differences, 86, 465–473.

    Article  Google Scholar 

  • Lown, J., Kim, J., Gutter, M., & Hunt, A. (2015). Self-efficacy and savings among middle and low income households. Journal of Family and Economic Issues, 36(4), 491–502.

    Article  Google Scholar 

  • Lusardi, A., & Mitchell, O. S. (2014). The economic importance of financial literacy. Theory and evidence. Journal of economic literature, 52(1), 5–44.

    Article  PubMed  PubMed Central  Google Scholar 

  • Lusardi, A., & Mitchelli, O. (2007). Financial literacy and retirement preparedness: Evidence and implications for financial education. Business Economics, 42(1), 35–44.

    Article  Google Scholar 

  • Mahdzan, N. S., & Tabiani, S. (2013). The impact of financial literacy on individual saving: An exploratory study in the Malaysian context. Transformations in Business & Economics, 12(1), 41–55.

    Google Scholar 

  • Mobarake, R. K., Juhari, R., Yaacob, S. N., & Esmaeili, N. S. (2017). The moderating role of self-control in the relationship between peer affiliation and adolescents antisocial behavior in Tehran, Iran. Asian social science, 10(9), 71.

    Google Scholar 

  • Modigliani, F., & Brumberg, R. (1954). Utility analysis and the consumption function: An interpretation of cross-section data. Post-Keynesian Economics, 1(338–436).

  • Moffitt, T. E., Arseneault, L., Belsky, D., Dickson, N., Hancox, R. J., Harrington, H., & Sears, M. R. (2011). A gradient of childhood self-control predicts health, wealth, and public safety paper presented at the proceedings of the National Academy of Sciences.

  • Morgan, P. J., & Trinh, L. Q. (2019). Determinants and impacts of financial literacy in Cambodia and Viet Nam. Journal of Risk and Financial Management, 12(1), 19.

    Article  Google Scholar 

  • Mori, N. (2019). Determinants of individual savings among Tanzanians. Review of Behavioral Finance.

  • Murendo, C., & Mutsonziwa, K. (2017). Financial literacy and savings decisions by adult financial consumers in Zimbabwe. International Journal of Consumer Studies, 41(1), 95–103.

    Article  Google Scholar 

  • Noor Zaihan, D. (2016). Determinants of saving behavior among generation Y students in Universiti Utara Malaysia (PhD), Universiti Utara Malaysia.

  • Nwodo, O. S., Ozor, J. O., & Okekpa, U. E. (2017). SavingsBehavior among Small Scale Business Owners in Nigeria (A Case Study of Enugu Metropolis). International Journal of Academic Research in Business and Social Sciences, 7(10), 2222–6990.

    Google Scholar 

  • Okello, C. B. G., Ntayi, J. M., Munene, J. C., & Nkote, N. I. (2016). Social capital: Mediator of financial literacy and financial inclusion in rural Uganda. Review of International Business and Strategy, 26(2), 291–312.

    Article  Google Scholar 

  • Otto, A. (2013). Saving in childhood and adolescence: Insights from developmental psychology. Economics of Education Review, 33, 8–18.

    Article  Google Scholar 

  • Pompili, M., Innamorati, M., Lamis, D. A., Erbuto, D., Venturini, P., Ricci, F., & Girardi, P. (2014). The associations among childhood maltreatment, “male depression” and suicide risk in psychiatric patients. Psychiatry Research, 220(1–2), 571–578.

    Article  PubMed  Google Scholar 

  • Rha, J. Y., Montalto, C. P., & Hanna, S. D. (2006). The effect of self-control mechanisms on household saving behavior. Journal of Financial Counseling and Planning, 17(2).

  • Salikin, N., Ab Wahab, N., Zakaria, N., Masruki, R., & Nordin, S. N. (2012). Students’ Saving Attitude: Does Parents’ BackgroundMatter. International Journal of Trade, Economics and Finance, 3(6), 479.

    Google Scholar 

  • Sang, L., ZatulKaramah, A. U., Mail, R., Jamal, A. A. A., Osman, Z., & Mohidin, R. (2014). An investigation of the level and determinants of financial literacy among different groups in Sabah (doctoral), Universiti Malaysia Sabah.

  • Schagen, S., & Lines, A. (1996). Financial literacy in adult life a report to the Natwest group charitable trust (pp. 36-45): NFER.

  • Sebstad, J., Cohen, M., & Stack, K. (2006). Assessing the outcomes of financial education. Washington, DC.

  • Serafini, G., Gonda, X., Canepa, G., Pompili, M., Rihmer, Z., Amore, M., & Engel-Yeger, B. (2016). Extreme sensory processing patterns show a complex association with depression, and impulsivity, alexithymia, and hopelessness. Journal of Affective Disorders, 210, 249–257.

    Article  PubMed  Google Scholar 

  • Sharu, H., & Guyo, W. (2015). Factors influencing growth of youth owned small and medium enterprises in Nairobi County, Kenya. International Journal of Science and Research, 4(4), 973–987.

    Google Scholar 

  • Shefrin, H. M., & Thaler, R. H. (1988). The behavioral lifecycle hypothesis. Economic Inquiry, 26(4), 609–643.

    Article  Google Scholar 

  • Shim, S., Barber, B. L., Card, N. A., **ao, J. J., & Serido, J. (2010). Financial socialization of first-year college students: The roles of parents, work, and education. Journal of Youth and Adolescence, 39(12), 1457–1470.

    Article  PubMed  Google Scholar 

  • Shim, S., **ao, J. J., Barber, B. L., & Lyons, A. C. (2009). Pathways to life success: A conceptual model of financial well-being for young adults. Journal of Applied Developmental Psychology, 30(6), 708–723.

    Article  Google Scholar 

  • Sirine, H., & Utami, D. S. (2016). Faktor-faktor yang memengaruhi perilaku menabung di kalangan mahasiswa Jurnal Ekonomi dan bisnis, 19(1), 27–52.

  • Sseguya, H., Mazur, R. E., & Flora, C. B. (2018). Social capital dimensions in household food security interventions: Implications for rural Uganda. Agriculture and human values, 35(1), 117–129.

    Article  Google Scholar 

  • Stolper, O. A., & Walter, A. (2017). Financial literacy, financial advice, and financial behavior. Journal of Business Economics and Management, 87(5), 581–643.

    Google Scholar 

  • Strömbäck, C., Lind, T., Skagerlund, K., Västfjäll, D., & Tinghög, G. (2017). Does self-control predict financial behavior and financial well-being? Journal of Behavioral and Experimental Finance, 14, 30–38.

    Article  Google Scholar 

  • Thaler, R. H., & Benartzi, S. (2004). Save more tomorrow™: Using behavioral economics to increase employee saving. Journal of Political Economy, 112(S1), S164–S187.

    Article  Google Scholar 

  • Topa, G., Hernández, M., & Zappalà, S. (2018). Financial management behavior among young adults: The role of need for cognitive closure in a three-wave moderated mediation model. Frontiers in Psychology, 9, 2419.

    Article  PubMed  PubMed Central  Google Scholar 

  • Trzcińska, A., Sekścińska, K., & Maison, D. (2018). The role of self-control and regulatory foci in money-saving behaviours among children. Current Psychology, 1–11.

  • Vitell, S. J., Bing, M. N., Davison, H. K., Ammeter, A. P., Garner, B. L., & Novicevic, M. M. (2009). Religiosity and moral identity: The mediating role of self-control. Journal of Business Ethics, 88(4), 601–613.

    Article  Google Scholar 

  • Wills, T. A., Ainette, M., & Walker, C. (2015). The construct of social influence Department of Epidemiology and Population Health. Albert Einstein College of Medicine.

  • Woldehanna, T., Amha, W., & Yonis, M. B. (2018). Correlates of business survival: Empirical evidence on youth-owned micro and small enterprises in urban Ethiopia IZA. Journal of development and migration, 8(1), 14.

    Article  Google Scholar 

  • Wong, B. A. (2013). Practices of savings among students (doctoral dissertation), Universiti Malaysia Sarawak.

  • Yi, C. Y., Gentzler, A. L., Ramsey, M. A., & Root, A. E. (2016). Linking maternal socialization of positive emotions to children’s behavioral problems: The moderating role of self-control. Journal of Child and Family Studies, 25(5), 1550–1558.

    Article  Google Scholar 

Download references

Author information

Authors and Affiliations

  1. Moi University, School of Business and Economics, P.O. Box 3900-30100, Eldoret, Kenya

    Eva Mpaata, Naomy Koske & Ernest Saina

Authors
  1. Eva Mpaata
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Naomy Koske
    View author publications

    You can also search for this author in PubMed Google Scholar

  3. Ernest Saina
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Eva Mpaata.

Ethics declarations

Conflict of Interest

The authors do not declare conflicts of interest. In fact, no other person besides the authors played a role in the design of the study; in the compilation, examination or presentation of the data; in the preparation of the manuscript, or in the decision to report the findings.

Ethical Approval

Initially, the researcher received approval from the Uganda National Council for Science and.

Technology to undertake research through a letter to gain access to the selected micro and small businesses. This letter was followed by an introductory letter from Moi University, a copy of the questionnaire with a cover page describing the study’s significance and anticipated results.

Informed Consent

In accordance with research ethics, the researcher adhered to research ethics rules, such as informed consent law where participants volunteered to engage in the study and were able to choose if they so desired, privacy, confidentiality, anonymity and accuracy. The study participants were required to have the study intent, planned methods, and duration. Participants were granted full disclosure of the scope of the project, the threats, advantages and alternatives, including an expanded opportunity to ask specific questions about this research. The researcher ensured patent, copyright, and other kinds of intellectual property were protected. The study maintained the full confidentiality of all information received by the researchers. Honesty has been preserved in the testing process; outcomes, processes and procedures to prevent data fabrication, falsification or misrepresentation. All quotations used and sources consulted by references were clearly distinguished and acknowledged.

Additional information

Publisher’s Note

Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.

Rights and permissions

Reprints and permissions

About this article

Check for updates. Verify currency and authenticity via CrossMark

Cite this article

Mpaata, E., Koske, N. & Saina, E. Does self-control moderate financial literacy and savings behavior relationship? A case of micro and small enterprise owners. Curr Psychol 42, 10063–10076 (2023). https://doi.org/10.1007/s12144-021-02176-7

Download citation

  • Accepted:

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s12144-021-02176-7

Keywords

Search

Navigation