Impact of Behavioral Finance on Employee Productivity: Mediating Role of Financial Decision Making

Abstract

This research aims to better comprehend the impact of behavioral finance on employee productivity by investigating the mediating effect of financial decision-making. A part of financial decision-making is the link between behavioral finance and employee productivity observed with the help of prospect theory, heuristic theory, and rational decision-making theory. In this research, the researcher initially constructed a theoretical framework and subsequently formulated hypotheses. The findings of this study have explained the positive and significant effect of behavioral finance on employee productivity, along with the significant positive mediating impact of financial decision-making on behavioral finance and employee productivity. After this, the research has described a positive and significant mediating impact of financial decision-making between behavioral finance and employee productivity; all hypotheses are positive and significant except that representativeness bias, overconfidence, and herding have no significant relationship. Keywords: behavioral finance, employee productivity, and financial decision-making