The impact of overconfidence on trading frequency and the decision to use financial leverage: A study in the Vietnamese stock market

Abstract

Financial knowledge plays a vital role in economic decisions. However, research on overconfidence or underconfidence in financial knowledge is limited. Therefore, the study examines these behavioral biases. Using data on 210 individual investors with three methods of multivariate regression, structural equation model, and logit regression, the results show that over- and under-confidence in financial knowledge directly affect the trading frequency and indirectly affect the use of debt. The results have implications for policymakers in raising investor awareness, helping to avoid behavioral biases in financial decisions, and contributing to sustainable stock market development.