Background: Investment decision by SACCO members is influenced significantly by many variables; Arbitrary or well-founded. It is not known to what extent emotional biases and financial literacy influence such decisions. In this paper, we seek to empirically estimate the contribution of emotional biases and financial literacy to financial decisions.

Objective: To empirically evaluate the influence of financial literacy and emotional biases on investment decisions by SACCO members.

Method: Data was collected from July 28th to 31st 2025 among 284 Imarisha SACCO members in Kericho Couty, Kenya. The data was cleaned, coded, tested for normality before analysis. To estimate the influence of financial literacy, herd behavior bias, overconfidence bias, loss aversion bias and investment decisions, a multiple linear regression followed by multiple logistic regression are estimated. The models were evaluated for validity. Then, results were obtained and interpreted.

Results: The findings from both multiple linear and logistic regression analyses demonstrate that emotional biases and financial literacy significantly shape SACCO members’ investment decisions. In this regard, the linear regression results indicates that investment decisions increase by 28.6% when emotional biases and financial literacy are held constant. A unit increase in emotional biases and financial literacy enhances investment decisions by 51% and 38.2%, respectively. Confirmatory analysis using logistic regression model corroborate the joint influence of emotional biases (overconfidence, loss aversion, and herd behavior) and financial literacy, with the latter contributing an additional 16.1% improvement in investment outcomes.

Conclusions: Both emotional biases and financial literacy influence investment decisions. There is both tradeoff and synergies in the influence of the considered variables.