The Impact of Financial Awareness on the Financial Stability in Malaysia


The term financial awareness is one that is not new although many people tend to confuse it with financial literacy. Financial awareness is perceived as significant and as a concept to be encouraged among people in the society. These perceptions are exemplified by the existence of center bodies that are dedicated to financial awareness.

This study seeks to investigate the synergies or rather the trade-offs between financial awareness and variables such as financial stability, income, old age poverty, financial stress and financial decisions. Previous evidence based on various research studies suggests both negative and positive impacts, but the evidence of Malay people in Malaysia is missing. This can be attributed to lack of financial awareness among the Malay people.

Keywords: Financial Awareness, Financial Stability, Financial Decisions, Income Management, Old Age Poverty.

CHAPTER 1: Introduction

Financial awareness is a multidimensional aspect and incorporates the most of the basic elements of financial literacy (Abdeldayem, 2016). It is apparent that the financial industry in Malaysia has grown fast through the past two decades and therefore access to financial services is still skewed towards large private and public enterprises in urban areas. In the past decades there has been a widespread distribution of banks and bank branches in the rural and urban areas thus a tremendous growth in the uptake of financial services and thus a subsequent development of the financial sector in the country. Financial stability is still core in the policy making processes across the globe. This therefore calls for the change in the consumer patterns so that majority of Malay people can take control of their finances. Among majority of Malay people, a paucity of financial awareness and knowledge has been documented despite the high input and efforts that have been invested by the private and government sectors (Abdeldayem, 2016). It is no brainer that Malay people are incapable of making sound and informed financial decisions. The poor financial management practices have attributed to vulnerability of the Malay leading to prevalent cases of financial scams and frauds. The surrounding issues attributed to financial literacy among the Malay people have been empirically researched narrowing down to different groups of people through random selection. The above mentioned was done through in-depth focus on the levels of financial knowledge, the influence of financial literacy on demographics, personal financial well-being, individual socio-economic traits and individuals’ saving practices (Abdeldayem, 2016). It is evidence-based that most Malay people lack not only financial awareness but also financial literacy.

Various studies suggest that the low financial awareness is attributed to low literacy levels among the Malays with differences that arise among different social groups and gender in the society. Scholars recommend strengthening of financial education in schools, colleges and universities could help reduce the prevalence of the low levels of financial awareness. This suggestion is in contrary to earlier studies that indicated that higher financial education is not a guarantee to financial awareness and the simultaneous responsible financial behavior. This was based on the assumption that people well equipped with financial knowledge lacked awareness and experienced financial difficulties; an indication that financial literacy is yet to be understood or fully studied (Abdeldayem, 2016).

Therefore, it is necessary for a person to understand how people develop the ability to make informed financial decisions as a result of financial awareness. The incorporation of financial knowledge, behavior and attitude all in one model will aid in the comprehension and development of an understanding about financial awareness and its effects.  The low levels of financial awareness indicates that financial literacy is not or rather has not been studies as a developmental process, expect for the financial behavior. Dowling et al (2001), calls for a comprehensive analysis of the subject financial awareness in order to develop an understanding of the casual relationship between financial awareness, stability, income, old age poverty, stress and decision making. This is the primary objective of this case of study.

The objective of this paper is to make an investigation on the effects of financial awareness on the financial stability, income, stress, old age poverty and decision making among the Malay people in Malaysia. Specifically, we shall dwell into an in-depth examination of the trade-offs and comparison between financial awareness versus stress, old age poverty, financial stability, income and decision making. Subsequently, we shall also seek to establish the existence of synergies between the financial awareness and the above listed. Study models on financial literacy mainly utilize an econometrics analysis approach but, in this study, we shall utilize a novel approach in the examination of financial literacy and awareness in a broad context. The study provides a contribution to the existing literature through an investigation of the development of financial awareness by an interaction of the behavioral components and attributes such as financial education, knowledge and attitudes (Abdeldayem, 2016). It is also worth pointing out that financial awareness of people is different based on their geographical locations.

1.1 Statement of the Problem

Dowling et al (2001), postulates that the role of financial awareness with respect to sound financial management is a quiz that many have struggled with in the past. It is perceived that people working in the finance and banking industry are expect to somewhat be good managers of personal finances better than employees working in other industries. Financial awareness and to a broader sense financial understanding facilitates the decision-making process and provides for a greater control over an individuals’ financial future, a more efficient utilization of financial products and services and a reduction of vulnerability to fraudulent schemes (Abdeldayem, 2016). In spite of the fact that financial awareness is significant to management of personal finances, it is evidence based that limited studies have been conducted in Malaysia. A research conducted on the impacts of financial awareness on the personal financial management habits of employees of banking and financial institutions concluded that financial awareness indeed influences personal financial management practice and people who have high financial awareness have better financial management practices.

1.2 General Objective

The general objective of this study was to determine the impacts of financial awareness on different financial variables such as financial stability, old age poverty, financial stress, income and financial decisions of Malay people in Malaysia.

1.3 Specific Objectives

  1. To examine the impacts of financial awareness on financial stress.
  2. To examine or rather investigate the impacts of financial awareness on financial stability.
  3. To investigate the impacts of financial awareness on income management of an individual.
  4. To examine the effects of financial awareness on old age poverty of a person.
  5. To demonstrate how financial awareness affects financial decisions made by an individual.

1.4 Research Questions

  1. What are the impacts of financial aware ness in financial stress?
  2. What are the impacts if financial awareness on financial stability?
  3. How does financial awareness affect the income management of an individual?
  4. To what extent does financial awareness affect old age poverty of a person?
  5. How does financial awareness affect the decision-making process of an individual?

1.5 Significance of the Study

The study may be essential to a great number of stakeholders. Under this section we shall extrapolate the significance of this study to employers, employees, policy makers, curriculum developers, future scholars and academicians demonstrating how each of the listed stakeholders may benefit from the study.

1.5.1 Significance to Employers

With the findings of the research, employers will be in a position to determine the true financial awareness of their employees. Employees with high financial awareness who have better understanding and management skills of their funds will be positioned better to advise their clients in financially sound manner, that is people employed in the banking and financial sectors. In a bank setting for instance, the employees will exude more confidence when dealing with the personal banking segment in the bank they are working in. It will also create confidence in the clients and they will in turn be loyal to the bank (Abdeldayem, 2016).

1.5.2 Curriculum Developers

Financial literacy subjects and courses can be introduced in learning facilities in order to facilitate growth of financial awareness to personal financial management among the Malay people. This would in turn act as an improvement to investment decisions, effective finance management; spur economic growth and financial market stability in the long run.

1.5.3 Policy Makers

The research can act as guidance to the policy makers for them to develop guidelines and policies that need to be followed in institution and especially financial institutions and banks that will help them gain financial knowledge that they can transfer to their clients (Abdeldayem, 2016). The trainings will help people to better their financial management skills and also get a better understanding of the risks associated with poor finance management both at institutional and personal level.

1.5.4 Future Scholars, Researchers and Academicians

This research study will form a basis or rather a foundation that will aid the future researchers who may want to undertake research on the field of personal finance management and financial awareness. The study provides a gap that has been covered in this study and that future researchers can strive to fill.

1.5.5 Institutional Employees

People are going to understand the influence of financial awareness on the financial choices they make on their investments; this would also motivate them to gain knowledge on personal financial management and personal investments and thus enabling them to make rational decisions about their finances to boost wealth.

1.6 Scope of the Study

This study presents the existing relationship between financial awareness and personal finance management. The study focused on Malay people in Malaysia.

1.7 Conceptual Framework

Financial awareness incorporates various concepts including knowledge, behavior and skills of an individual in order to make informed financial decisions and ultimately achieve individuals’ financial wellbeing. It includes the ability of a person to be able to apply knowledge and skills and to have an understanding about effective and efficient management of financial resources. A financially aware individual should also be able to differentiate between the various financial options, discuss the financial issues and plan accordingly and proficiently answer decisions that influence money management variables.

Financial awareness in our case of study is a conceptual model that incorporates the following components; financial stability, management of income, factors of old age poverty, financial decision-making ability, financial stress and financial wellbeing. The above listed concepts are all related to the ability of a person to plan accordingly. On the income management, an individual should be coming with budgets that are strictly dictated by the income of that individual. Financial awareness is an understanding of the economic and financial issues on a personal basis and in a country or Worldwide. Gender, age, income, work experience, academic discipline and class rank the financial awareness measurement of Malay people in Malaysia.

Financial literacy or training is a strategy that can be applied to impact the exposure to managers about their financial awareness and the participation in the financial market. People with training courses tend to influence financial awareness. Learning is a significant element of strategic financial management. The more the working force is trained the more they can manage their finances well because they are more financially aware. Perceiving financial literacy as a
process, the input, throughput and output are conceptualized. It presumes two alternative paths to financial literacy. Therefore, it goes beyond the knowledge dimension up to the application dimension. It is proposed that an individual’s financial knowledge is a result of financial education which leads to an acceptable financial behavior. The first path presumes it to occur through the changed attitude due to improved financial knowledge and the second path is a direct path where it is hypothesized the increased knowledge will generate an immediate change in behavior. The proposition in the proposed model is, when individuals’ knowledge on financial matters increase, it will empower them through a positive change in attitude towards finance. This ultimately can produce accepted financial behaviors.


CHAPTER 2: Literature Review

This chapter examines the literature related to the effect of financial awareness on personal finance management. The section was guided by specific research objectives geared towards the effect of financial awareness on personal financial decisions, personal income, financial stress, old age poverty and financial stability.

Financial awareness is the ability of an individual to apply financial knowledge and skills in the effective management of financial resources at a personal level and through the life cycle (Abdeldayem, 2016). Financial awareness is very important in the equipment of individuals with financial knowledge and skills for effective management of money. Over the past few decades, the Malay people in Malaysia have witnessed a dramatic increase in the number of financial services and products. This translates to a remarkable level of interest while making a choice on the range of financial products and services. But the question that arises is whether Malay people have adequate knowledge and understanding of these products and whether they are able to manage the inherent risks as well as a taking advantage of the available opportunities. Lack of financial understanding and to a large extent the lack of financial awareness has presented a financial crisis among the Malay population and thus there is a need for reassessment of the individuals’ economic understanding and further reconsider the level of risk that comes in hand with individuals’ financial decisions (Dowling et al, 2001).

2.1:  Financial Awareness Vs Financial stability

Financial awareness can be termed as the having knowledge about finance or the ability of a person to understand financial knowledge and skills. This will enable a person to make effective decisions informed by his or her understanding in finances (Abdeldayem, 2016). The existent financial crisis among the Malay people in Malaysia does not stem from a single cause but lack of financial awareness plays the central role. The lacks of basic financial understanding, especially for credit and investment, has caused many people support financial risks more than they could afford. This is why we cannot ignore or rather neglect the significance of individuals’ level of financial awareness, and how appropriately the individual is able to manage his or her budget and his personal wealth. This is very crucial in the short and medium but more importantly in the long-term and thus translates to become a very significant asset for the overall financial stability (Abdeldayem, 2016).

The professionals in the financial sector need to develop an awareness of the risks of their products and also be able to elaborate services to their clients. Thus, financial awareness has with time been acknowledged as a vital pillar of an informed financial framework and regulatory on the national scene and thus a crucial component of not only financial but also economic stability and development (Dowling et al, 2001).

. Also, for an effective utilization and sustainability of financial products on offer to increase the levels of wealth in the society, it is necessary that both the consumers and professionals in the financial sector gain full understanding and knowledge about the financial products they consume and the potential risks they expect (Abdeldayem, 2016).

Financial awareness is core to making not only well-informed financial decisions but also decisions that are rational. It is therefore necessary to comprehend the basic and the most fundamental financial decisions that range from the time value for money, the flexibility of annuities payment designs and the significance of maturity in the calculations of the overall credit cost. Additionally, it is essential to develop a clear understanding of the more complicated financial matters like the fixed and flexible interests, the significance of the interest risk (Dowling et al, 2001).

If a broader understanding is provided on the above outlined concepts and further combining them with the consumer protection legislation, then, that will be a step in the prevention of excessive growth of credit in future, undesired movements of non-performing loans and potential price bubbles (Abdeldayem, 2016). This will be in the interest of not only the regulators but also on the interest of financial products consumers. It will also have an impact on the banking sector and the overall sustainability of the economy.  Financial awareness acts as a very important pillar of support in the overall efforts to reduce tax evasion and in the legalization of the economic activities of a nation. This poses as a crucial issue in the context of ballooning budget deficits and gradually decreasing growth rates. This means that through an increase in financial awareness among people, there is a significant reduction of what is termed as “gray economy” with a positive effect in the tax collection, accuracy if economic data un the system and therefore an improvement in the efficiency of future economic policies (Abdeldayem, 2016).

Another aspect of financial awareness is making people develop insights on the roles and importance of credit bureaus. If one obtains information form credit bureaus on the bill payments and borrowing habits for instance, lenders are in a position to better the assessment of credit worthiness criterion of a potential borrower (Dowling et al, 2001).

This will translate to a positive influence in the decision if whether to offer credit or not and at times can affect not only the interest rates but also other terms of the loans. The full financial awareness of the basic financial rules and maintenance of good credit profile in a credit bureau can aid in lowering the overall economic leverage, control the NPLs, and avoid a creation of asset bubbles (Abdeldayem, 2016). Under this context, financial awareness acts as a protective platform between both the lenders and the consumers avoiding the financial shocks.

2.2 Financial Awareness Vs Financial Stress

Stress is all over and is around everyone in the society. People experience stress all forms of stresses but the greatest stressor is the economic hardships (Abdeldayem, 2016). People undergoing economic hardships are often worried because they are incapable of making their ends meet. We therefore are going to interrogate the effects of financial awareness on financial stress. Stress is an unpleasant feeling that is experienced by an individual who perceives that something that is valuable to him or her is being threatened or has been lost (Dowling et al, 2001).

In our case the threat or the loss could be in terms of material wealth or finances. An event qualifies to be stressful depending on ones’ interpretation. This means that different people react differently to different financial situations. For instance, one may perceive a debt problem as a challenge and mobilize financial resources to deal with the debt situation while another person may perceive the situation as beyond his or her capability to manage it. Financial stress can be termed as an unpleasant feeling that one is not in a position to meet financial demands; life necessities or rather have sufficient finances to make the ends meet (Dowling et al, 2001). This is a mixed feeling of fear, dread, anxiety, frustration and anger. Financial stress is subjective to economic hardships which may result from lack of financial awareness (Abdeldayem, 2016).

Financial awareness aids in the assessment of an individual’s level of understanding of the fundamental financial concepts, one’s capability and confidence in the management of his or her personal finances. This means that one’s level of understanding is vital in making not only short-term decisions but also long-term financial planning (Abdeldayem, 2016). It can also be applied in the considerations of lifetime events and the dynamic economic world. Financial awareness will enable one make appropriate financial decisions that will ensure financial wellness in the long-run (Dowling et al, 2001). Inappropriate financial decisions made as a result of lack of financial awareness will lead to financial stress as a result of an individuals’ difficulty in meeting the required financial obligations that will be as a result of shortage of finances. Causes of financial stress range from large amounts of debt, medical bills, job loss or simply irresponsibility in the spending habits of an individual.

Bankruptcy cases have been prevalent among the Malay people in Malaysia. To a greater extent, bankruptcy can be attributed to lack of financial awareness. The bankruptcy trend has over the past three decades been on a steady upwards climb. With the high frequency in the cases of bankruptcy, social and psychological effects of bankruptcy can be felt in the society. The social and psychological effects account for financial stress cases.

To effectively deal with financial stress, it is essential to create some financial strategies that will ensure appropriate management of finances by an individual. If an individual is financially aware, then he or she will employ financial management strategies that will aid in the prevention of financial stress as a result of inadequate funds (Dowling et al, 2001). Programs such as preparation of a budget and creation of an emergency fund will prevent future instances of social and psychological financial stress.

2.3 Financial Awareness Vs Financial Decision Making

Financial decision is a fundamental element of a long-term financial life. Financial decision making can be defined as selection of possible financial choices made or rather considerations. To make good financial decision one must not only have enough financial knowledge but also must be able to apply the financial knowledge to develop and manage their finances. Financial knowledge is essential in the development of financial literacy, behavior and awareness. This means that to make appropriate financial decisions, one must not only have financial knowledge but also must be able to apply the knowledge in making considerate financial decisions. Financial awareness influences the decision-making process of an individual, and thus it is relevant in the money management habits (Dowling et al, 2001). Cash, credit, and saving management habits are the best management habits that are informed by the financial decisions and as a result of better financial awareness. This means that lack of financial awareness will lead to making uninformed financial decisions and this will translate to long-term societal and social consequences (Abdeldayem, 2016). Lack of financial awareness will lead to a person making wrong decisions that might affect him or her in future. Research indicates that financial awareness directly affects the not only the financial decisions of an individual but also the financial behavior.

The understanding of whether and how financial awareness influences the financial decisions is significant in the efforts of coming up with effective financial education programs that prepare people to be not only effective but also efficient financial managers when they are in the job market. People equipped with financial knowledge take complicated financial decisions in the current financial environment. With financial awareness fewer financial mistakes are made and due to this, there is avoidance of costly future (Dowling et al, 2001). Experts dictate that financial decisions are directly correlated to the financial awareness of an individual. Financial awareness thus is more essential now more than ever in order not to make financial mistakes. Contrary to the opinion of most people, financial education does not translate to financial awareness and thus financial literacy will not translate to the best financial decisions (Abdeldayem, 2016).

According to Gurchiek (2008), people make daily money management decisions that enable them to plan better and manage their life events such as the day to day basic needs. The understanding and skills that are related to financial awareness are for instance, the ability of an individual to balance a checkbook, prepare a budget in advance and to make a comparison of prices of different financial products (Dowling et al, 2001). It is clear that there is an easier access to credit cards, deregulation of the financial sectors and technological advancements in a manner that the financial services are broadly distributed. It is no brainer that many consumers are left with more available options to spend their incomes. It is therefore necessary to come up with some tough financial decisions, like for example the saving decision, to defer the consumption of ones; earnings today. Financial awareness comes into place here, because if a person understands the financial knowledge and be able to apply the knowledge accordingly, the he or she will assume a saving pattern (Dowling et al, 2001). This means that during the best earning periods of the individuals’ employment, the individual will save increasingly and smooth out expenditure so that during the low income periods the individual will utilize the savings to fund their daily financial spends. From a macro-economic perspective, the savings of a person benefit the overall economy of a country. This is because they will act as a provision for the infrastructure development and long-term investments and therefore contributing to the economic progress of the country (Abdeldayem, 2016).

Financial awareness contributes to a persons’ investment decisions. An investment is a form of risk whereby an individual puts money into an asset with the expectation of dividends or capital appreciation. A good investment strategy will be informed by ones’ financial awareness and financial understanding. Take for instance an individual, who has invested in the stock market, he or she will be required to make appropriate so that when an opportunity presents, he or she can take advantage of the equity premium and benefit from the risk premium (Abdeldayem, 2016). People who lack financial awareness will refrain from such investments as stock markets due to lack of trust. However, sound decisions must be made by well informed and financially aware people since some individuals are better off in investing in other businesses because there is a need to follow a passive investment strategy.

On the other hand, individuals may be required to borrow money in order to meet their financial needs. The debt management decisions are made to help the consumers avoid being over indebted. The capability of performing calculations requires a minimum understanding of the compound interest and the time value for money. Appropriate financial decisions should address the amount of money that an individual should accumulate and the amount of money to borrow for a smooth consumption over the time-cycle and also requires an understanding of the interest rates. This means that people faced with complex situations need to be well equipped with financial knowledge and skills. An individual required to make financial decisions is required to obtain the financial information, interpret the information at hand and make a forecast about many variables, basically he or she must be financially aware (Dowling et al, 2001).

2.4 Financial Awareness Vs Old Age Poverty and Income Management

Savings is the greatest factor of income management. There is a need for people to make savings from the income earned. Saving culture is important because of the following benefits; there is an improvement in the lifetime consumption patterns, provides for retirement and old age and finally to finances investments that require large funding. High levels of financial awareness have a positive impact on saving patterns among people in the society. This is because an increased level of financial awareness will imply that an individual will have a better understanding of their current financial situation and thus will make sound decisions that will translate to a better plan for their financial future (Dowling et al, 2001). The analysis of Malay people in Malaysia reveals that financial awareness has crucial implications for the saving decisions and the retirement arrangement. Research indicates that individuals who plan for their retirement do so by an accumulation of more retirement savings. Questions asked to financially aware Malay people about their thought of retirement is a strong predictor that retirement has double wealth benefits of those who had clearly planned for their retirement through savings. People who got an early exposure to financial studies and later are able to develop an understanding about financial management or in other words the financially aware people, tend to save more.  People with low financial awareness are unlikely to be having a retirement plan, and hence will end up accumulating less wealth in their prime years and this will lead to old age poverty. People who lack financial awareness are less likely to make savings. Ore financially sophisticated individuals are more financially aware and therefore are like to develop a retirement plan so that they will be ready and when that time comes they will be having a high retirement income as opposed to the old age poverty that most people undergo.

Low financial awareness plus a lack of financial understanding influences an individuals’ ability to maintain a savings pattern as a security for a comfortable retirement life (Abdeldayem, 2016). The failure of individuals to plan accordingly for their retirement is across the board among the Malay people and is attributed to lack of financial understanding. In Malaysia, a study conducted on Malay people to examine their personal management practices encompassed the saving practice of both the employees and those that are not in formal employment. In the study, is was presumed that those who were formally employed had undergone some level of training as the formal employees in the financial sector and thus perceived to have a financial understanding or rather financial awareness as compared to those who were not formally employed. From the survey data obtained, most respondents who were formally employed embraced saving culture, a demonstration of setting aside a fraction of their monthly income (Dowling et al, 2001). Additionally, financially aware individuals were constantly looking for opportunities to save unlike the people who had low financial understanding. Similar findings have also been obtained from most developing nations worldwide, where researches to investigate the impact of financial awareness on the age poverty. Financial awareness is positively related to retirement planning and the vice versa is related to the old age poverty (Abdeldayem, 2016).

CHAPTER 3: Research Methodology

3.1 Introduction

The main aim of this research study is to examine and investigate the influence of financial awareness on variables such as financial stability, financial decisions, old age poverty, financial stress and the income of an individual on Malay people in Malaysia. Under this chapter we will elaborate on the research design and research methodology that was utilized in the research study. This chapter will present a through discussion about the research design, sample section, target population and the sampling techniques applied. The research procedure, data collection and methods of analysis will also be extrapolated.

3.2 Research Design

Research design can be termed as a blueprint or a framework through which business research project is conducted in an effective and efficient way (Dowling et al, 2001). It contains details of the necessary procedures that will be utilized during the collection, measurement and analysis of information which will in turn aid the researcher in structuring the appropriate solutions for the business research problems (Abdeldayem, 2016).

The research design utilized for this project was descriptive research design. This is because it best provides answers to the immediate questions about the present or the current affairs. It also incorporates an explanatory data approach about the variables being investigated. Thus, this design approach is used in the generation of an appropriate record of the prevalent happenings within specific population. Apparently, the researcher will not put an exertion control over the phenomenon of interest but instead they are observed as they happen at specific points and within a specific timeline. Thus, this research design was utilized in the examination if of the extent to which financial awareness is related to other variables (financial stability, income, old age poverty, financial decisions and stress). From this prediction will be made based in the extent if association. Financial stability, income, stress, financial decisions and old age poverty will be the dependent variables and financial awareness will be the independent variable.

3.3 Population and Sampling Design

3.3.1 Population

Population can be termed as a collection of persons or objects that one is interested in knowing about. The population of this research study was the Malay people in Malaysia as of 29.01.2020,

3.3.2 Sampling Design

A sample can be termed as a limited proportion of a statistical population who physical characteristics are considered in the quest of obtaining information about the complete populace that has been selected for a certain research. Additionally, it is a selected group of respondents that have been set out from the large population for survey reasons or rather for the purpose of obtaining representative information about the whole population (Abdeldayem, 2016). A sampling design therefore is the criteria utilized in the selection of the sample during the study. Sample Frame

Sampling frame is termed as the comprehensive ordered list of persons in a given population and contains participants only. The sampling frame utilized in this study will be the Malay population Sampling Technique

These are the range of methods that are applied in drawing samples from the population of interest in such a way that the sample aids in determining the hypothesis of the specific population. This research study utilized a non-probabilistic sampling. In this sampling procedure, the basis for estimation of the probability for each item of the population being included in the sample is not afforded. This sampling procedure is convenient and cost friendly.

Convenience sampling was applied during the selection of individuals from the population of interest. Research postulates that homogenous subjects such as we are handling in this study are best handled by utilizing an effective sampling technique (Abdeldayem, 2016). The technique will give room for the researchers to get high response from the respondents in the population. Lao, time will be saved because the researchers will not travel for long distance looking for the respondents (Dowling et al, 2001). The technique is cost effective and the respondents will be able to operate within a limited budget as no extra setups will be required. The participants of the research were chosen based on the convenience of the researcher. Sample Size

A sample can be termed as a representative portion of a whole population. The largeness of a sample should be guided or rather dictated by the function of variation in the parameters of the population of interest and the estimation of precision that is required by the researcher. The size of the sample enhances the details and comprehensiveness of the information. The limitations of time and cost prevent the study of the whole population (Abdeldayem, 2016). The target population is 200 members of the Malay people in Malaysia. The sample size will be derived through the Yamane formula (Dowling et al, 2001). This is because the formula provides a much simpler formula for the calculation of sample sizes and it also provides confidence and the risk levels of the given population sample. The formula applied is outlined below:

n = (N) / (1+Ne2)


n- Sample Size

N- The population size

e- 10% probability error.

Therefore, n= {(200) / [1+ (200×0.12)]} =66.66

Therefore, the sample size for this research study will be 67 respondents.

3.4 Data Collection Methods    

Primary data collection method was applied to obtain data. Self-administered questionnaires were distributed to achieve high response rate. The researcher designed the research instrument carefully. The utilization of questionnaires was because they are reliable and promote honesty due to their anonymity nature (Dowling et al, 2001). The questionnaires also tend to be economical in terms of time and money management. Closed ended questions were used in the questionnaires to enhance the application of quantitative data analysis. They also had scale questions for the measurement of the degree of rating by the respondents (Abdeldayem, 2016). The questionnaires were divided into five main divisions where the first section sought the demographic information in relation to the respondents. The second and the third section sought to test for the financial awareness and the investment choice that would be made by the respondents respectively. The forth and the fifth part dwelt on the remaining variables of the research study.

3.5 Research Procedures

The formulation of the questionnaire was on the basis of three research objectives. The instruments were tested by the use of a pilot test for the establishment of the validity before the real administration commenced. The pre-testing enhances the consistency of the data obtained during the research. The pilot research was undertaken through random research of the respondents from the target population, but later they were not part of the sample (Dowling et al, 2001). The research utilized a sample of ten respondents to test whether the questionnaires were reliable.

The accuracy of the data to be obtained was largely dependent on the instruments of data collection in terms of reliability and validity. Validity is the extent to which the findings obtained from data analysis are actually a representative of the phenomenon of the research study. On the other hand, reliability is the measure of the extent to which the instruments utilized yield consistency in the data obtained after every repeated trial.

The researcher then undertook administration of the questionnaires to the individual respondents of the target population. The researcher then elaborated the need of the study to the population and the significance of providing authentic information. This was followed by data collection follow-up exercise through contacting and visiting the respondents to encourage high responsiveness (Dowling et al, 2001). The researcher then kept a track of all the questionnaires that had been handed out to all the respondents to ensure that all the necessary instruments were handed out and collected back.

3.6 Data Analysis Methods

The statistical analysis is the utilization of reasoning to understand the data that has be collected. The structure questionnaires were programmed for all the questions in regard to each of the research objective to enhance easier processing of data. Quantitative method was applied for the analysis of the data obtained and also a descriptive analysis approach. Descriptive analysis is a method whereby transformation of raw data into frequency distribution tables, charts and percentages is applied to obtain a complete interpretation of the data obtained. SPPS was applied for data analysis. Cross tabulation was applied for the description of the variable relationship (Dowling et al, 2001). Inferential statistics was applied for the examination of the degree of variance between the variables where alpha was at the level p<0.05.

The study utilized the use statistical frequencies for the analysis of the differences that arose in the population demographics. Standard deviation and the Mean ware employed in the determination of strength of the various financial decisions shown by the respondents at each section.


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