This paper examines how family financial socialization in adulthood is linked to the development of investment literacy among individual family members within the context of innovative financial services, specifically peer-to-peer (P2P) lending. Our findings revealed that P2P lending investors engage in a moderate level family financial socialization suggesting that family, as a key financial socialization agent in childhood and adolescence, maintains its role in adulthood. Additionally, such investors possess a high-level investment knowledge, skills, and attitudes. Explicit family financial socialization has a significant and positive effect on the individuals’ investment knowledge, skills, and attitudes, while the effect of implicit financial socialization is significant but negative for knowledge and attitudes. Such findings suggest that family discussion among adult members result in higher, while observations of family members’ investment behavior led to lower investment literacy. Our study found no significant moderating effect of the strength of social ties indicating that dynamics of family relations neither strengthen nor weaken proximal socialization outcomes. The analysis of differences across demographic groups unveiled statistically significant distinctions concerning respondents’ gender, income, and education. These results provide important insights for stakeholders, underscoring the significant role family socialization in adulthood plays in shaping individuals’ investment literacy, particularly of those investing on P2P lending platforms.

Research background: The shift towards globalization, technological innovations, and digitalization has led to the emergence of various innovative financial products, such as peer-to-peer (P2P) lending. Characterised by digital solutions and easier access, P2P lending allows investors to make quick and more frequent investment decisions. However, this can increase investors’ vulnerability to behavioural biases, and therefore leave them open to potential losses. There is a research gap in understanding P2P lending investors’ rationality, including research methods tailored to the specifics of this innovative product. Purpose of the article: Objectives of our study is to propose a conceptual approach and multicriteria-based methodology to measure the degree and type of investor rationality; to apply it in Lithuanian P2P lending context, and to explore the differences in rationality based on the investors’ sociodemographic characteristics. Methods: The data set represented answers to an online survey collected from 390 Lithuanian P2P lending investors. Three groups of criteria were employed to assess rationality degree and type: risk and return (reflecting utility maximization), use of available information, and behavioural biases criteria. The rationality index was developed to measure the rationality degree of individual P2P lending investors; descriptive and cluster analysis were performed to assess the rationality type; t-test, ANOVA test and regression analysis were used to investigate its influencing factors. Findings & value added: The results indicated a moderate overall degree of P2P lending investors’ rationality, with bounded rationality representing 96,67% of the sample. Further clustering analysis proved that bounded rationality behaviour is not homogenous; therefore, measures taken to increase individual’s rationality should be tailored to their specific rationality type primarily focusing on low-scoring rationality criterion. Regarding sociodemographic factors, investors’ financial literacy was identified as the only significant and positive determinant of P2P lending investors’ rationality, reinforcing the importance of financial literacy in society.

This study explores survey data of investors in peer-to-peer (P2P) lending aiming to assess their investment literacy, how this literacy is affected by their financial socialization and the strength of their social ties, and whether this effect differs among investors’ sociodemographic groups. Our research model was built based on Gudmunson and Danes (2011), Gudmunson et al. (2016) and Potrich et al. (2016). It measured investment literacy, assessing three components — knowledge, skills and attitudes; included multiple socialization agents; and investigated both direct and indirect effects of financial socialization. Descriptive and reliability analysis, confirmatory factor analysis (CFA), t-tests, analysis of variance (ANOVA) and second-order structural equation modeling (SEM) analysis were employed. The results indicate that the investment literacy of P2P lending investors is high. The compound direct effect of financial socialization on the overall level of investment literacy was found to be positive and stronger than on its individual components. Although the strength of social ties had a strong influence on financial socialization, its indirect effect on investment literacy was rather weak. Peers proved to be the main socialization agent and exhibited the strongest social ties with the respondents. The strongest effect of financial socialization on the investment literacy was identified for P2P lending investors in 18–34 years group working in the financial sector with a net monthly income below 1500 euros. The research contributes to the existing literature by providing the methodology and valuable insights into the level of financial literacy among P2P investors and how investment literacy is or is not formed under social interaction in a close social environment.

Over the recent decades, the world has experienced several major disruptive events with farreaching global impacts on societies, economies and financial systems. This study investigates the financial market reactions to one of the most recent global disruptive events, the COVID-19 pandemic, focusing on the role of investors' herding behaviour during uncertainty. While previous research has mainly explored this on Asian and American markets, our study addresses this gap in understanding Northern European reactions, particularly in rising and falling markets, and aims to explore the existence of herding during the COVID-19 pandemic and to further investigate its occurrence and intensity during the periods of upward and downward movements. It uses Nasdaq Nordic and Baltic daily stock data and employs the cross-sectional absolute deviation method to estimate the reaction of individual Nordic and Baltic stock markets. The results reveal that herding was observed on three out of four Nasdaq Nordic stock markets (Sweden, Denmark and Finland) and one out of three Nasdaq Baltic stock markets (Lithuania). This behaviour persisted throughout the entire COVID-19 period and during market downturns, with no herding observed during upward market movements. This study contributes novel insights into herding on Northern European stock markets, highlighting distinct investor responses to the same global disruption and emphasizing the likelihood of herding during market downturns due to fear and uncertainty. Additionally, the research indicates more pronounced herding behaviour in developed rather than frontier stock markets, suggesting that during global disruptive events, smaller and less liquid stock markets might react more rationally, although more research is needed. Implications for Central European audience: Acknowledging herding behaviour during global disruptive events is relevant for both investors and policymakers. Investors in Central and Eastern European countries can benefit from their awareness of herding behaviour, especially during market downturns, by taking advantage of mispriced assets. Moreover, understanding the psychological biases driving herding can promote more rational decision

The research aims to assess how rational investors are in making real estate crowdfunding investment decisions and weather similar rationality investors share common individual-level characteristics. The research data was collected through an online survey and investors’ rationality was assessed according to risk & return and behavioral biases criteria. Results revealed that 18% of the respondents were rational and as much as 78.1% of them demonstrated bounded rationality behavior. Further clustering of bounded rationality investors identified three distinct clusters and suggested that bounded rationality proved to be largely based on established behavioral biases rather than on failing to understand and apply risk and return criteria. In terms of individual-level characteristics, rationality of real estate crowdfunding investors significantly related to their financial knowledge, but not to their age, sex, income level, education, occupation, residence and interface with finance sector.