Are the saving decision patterns of bank customers also clouded by psychological biases? Evidence from Ghana

Abstract

PurposeThis paper attempts to investigate the influence of psychological biases on saving decision-making of bank customers in Ghana.Design/methodology/approachIt employs weighted least squares regression to test the effect of psychological biases on savings decisions of bank customers.FindingsThe findings show that all the nine psychological biases, namely mental accounting, availability, loss aversion, representativeness, anchoring, overconfidence, status quo, framing effect and disposition effect employed for the study have a significant influence on saving decision of bank customers. The results depict that psychological biases are entrenched in the saving pattern of bank customers in Ghana.Practical implicationsFor policy purposes, the study recommends that bank customers need to enhance their knowledge of psychological biases in order to improve their gains from savings, and not to fall prey to these prejudices. The satisfied customer is a dependable source of bank viability and survival.Originality/valueTo the best of the knowledge of the author, this study provides the first empirical evidence of the influence of psychological biases on saving decisions of bank customers in Ghana. The findings of this study will enhance knowledge on the influence of psychological biases on individual decision-making and will accentuate the fact that the individual is not an entirely rational being.

Behavioral biases and personal indebtedness: a systematic literature review

“…It follows from this logic that mental accounting, since it has a positive relationship with nancial literacy, would tend to have a negative impact on indebtedness.On the contrary, studies report the tendency of consumers to categorize debts and savings in separate mental accounts (Hersh eld et al, 2015) and that adopting this narrow mental accounting attitude tends to favor indebtedness Swacha-Lech & Solarz (2019). Mental accounting has a signi cant positive in uence on savings decisions(Tetteh & Boachie, 2021) and interacts in the process in which people take on debts with high interest rates while maintaining savings that yield low levels of interest(Sussman & O'Brien, 2016). In this context, adopting mental accounting attitudes tends to promote the achievement of savings goals, but in contrast, results in the need to take out loans, that is, to get into debt Swacha-Lech & Solarz (2019).…”