Financial literacy and members’ investment decisions

Abstract

Saving and Credit Cooperative Societies (SACCOS) play a crucial role in enhancing financial inclusion and mobilising savings for investment among Tanzanians. However, it remains unclear whether members’ financial literacy influences the effectiveness of their utilisation of SACCOS platforms for wealth building investments. This study was guided by dual process and planned behaviour theory, which emphasises the importance of financial knowledge among members and examines how financial attitudes and behaviours affect SACCOS members' investment decisions. The study employed a cross-sectional research design, using purposive and simple random sampling to select 220 respondents. Primary and secondary data were collected through structured interviews, survey questionnaires, and documentary reviews. The data were analysed using the binary logistic regression model. The study found that financial knowledge and financial behaviour positively and significantly influence SACCOS members' investment decisions, while financial attitude has negative and insignificant effects. These findings emphasise the crucial role of financial education and prudent financial behaviours in enhancing investment decision-making within the cooperative context. It is concluded that financial literacy significantly influences members’ investment decisions. Therefore, the study recommends that Muungano Kikavu Chini SACCOS management maintain a focus on improving the financial knowledge of their members to increase investments in shares, deposits, savings, loans, and SACCOS projects, which directly contribute to enhanced financial inclusion. This can be achieved through financial literacy programmes, workshops, and seminars. Additionally, SACCOS should provide financial education and training programmes for their members and develop products and services tailored to the needs of members with varying levels of financial knowledge. Moreover, specific interventions, such as financial education and counselling, should target members whose financial habits may hinder their progress, assisting them in adopting practices that promote greater financial stability and inclusion.