Moderating Effect of Financial Literacy on Relationship between Anchoring and Investment Decision among SMEs in Nairobi County

Abstract

Moderating effect of Financial Literacy on Relationship between Anchoring and Investment Decision among SMEs in Nairobi County. The study was premised on the regrets theory. Methods/materials: The positivism paradigm was deployed. The study adopts an explanatory research design. The target population was 102,821 firm owners. A sample of 383 respondents was selected using the stratified random sampling technique. Multiple hierarchical linear regression models were used to establish moderating effects of financial literacy. Findings: Anchoring factors positively influenced investment decision (β = 0.173, p < 0.05). The study also found that financial literacy moderates the relationship anchoring and investment decisions (β = .92, p > 0.05, ∆R 2 = .07). Conclusion/Practical implication; Anchoring enhance investment decisions among the small and medium enterprise. In addition, high financial literacy improves the relationship between anchoring behaviour and investment decisions among SMEs. This would enhance better decision investment decisions improving the financial performance of the SMEs.