Financial Services Beyond Banking: Risk Tolerance Measures for Portfolio Investors

2017 ◽  
pp. 313-325 ◽  
Author(s):  
Joseph C. Paradi ◽  
H. David Sherman ◽  
Fai Keung Tam
Keyword(s):  
Financial Services ◽  
Risk Tolerance ◽  
Banking Risk

Mobile investment technology adoption among investors

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Lu Fan
Keyword(s):  
Technology Adoption ◽  
Financial Services ◽  
Diffusion Of Innovations ◽  
Mobile Apps ◽  
Investment Decision ◽  
Risk Tolerance ◽  
Content Type ◽  
Investment Decision Making ◽  
Mobile Financial Services ◽  
Money Transfers

PurposeThe purpose of this study is to examine investors' internal characteristics, including investment literacy, risk tolerance and familiarity with mobile financial services, as antecedents of mobile investment technology adoption among American investors.Design/methodology/approachUsing the 2018 National Financial Capability Study and its supplemental Investor Survey, this study examined antecedents, including investors' internal characteristics, in relation to mobile investment technology adoption. Nested logistic regression analyses were performed for adopting mobile apps for investment decisions and for investment trading.FindingsThis study found that objective and subjective investment knowledge, experience using mobile banking for payments and money transfers, and certain ownerships of investment vehicles (such as whole-life insurance policies and ETFs) were significant determinants of mobile investment decision-making. On the other hand, subjective investment literacy, risk tolerance, familiarity with mobile financial services, and portfolio value, as well as certain types of investment vehicles were significantly associated with mobile investment trading.Originality/valueThis study is among the first to examine investors' investment literacy, risk tolerance and familiarity with mobile financial services as investors' internal characteristics in relation to mobile investment technology adoption. The diffusion of innovations theory and related concepts provide theoretical support for this study. The findings provide new insights into mobile investing as an emerging FinTech subject and provide implications for practitioners and FinTech developers, as well as contribute to the literature of mobile investment service adoption among retail investors.

Risk management behaviour in banking

2018 ◽  
Vol 44 (7) ◽  
pp. 902-918 ◽  
Author(s):  
Elizabeth Sheedy ◽  
Martin Lubojanski
Keyword(s):  
Risk Management ◽  
Financial Services ◽  
Older Workers ◽  
Female Gender ◽  
Risk Tolerance ◽  
Individual Risk ◽  
Speaking Up ◽  
Data Set ◽  
Content Type ◽  
Management Behaviour

Purpose Risk management is now considered the responsibility of all financial services professionals, not just senior leaders or risk specialists. Very little is known about the role of staff in risk management, so the purpose of this paper is to, first, clarify what constitutes “desirable” risk management behaviour by financial services staff based on the practitioner and regulatory literature. Based on this understanding, the authors analyse the characteristics of those who are most likely to display such behaviour. Design/methodology/approach The paper analyses some 36,000 survey responses across ten banks headquartered in Anglo countries. Findings Desirable risk management behaviour at the employee level includes compliance but goes well beyond mere compliance to include speaking up, thoughtful engagement with and accountability for the risk management framework. The authors find a significant negative association between individual risk tolerance and desirable risk management behaviour. Older workers as well as those with greater seniority are more likely to report desirable risk management behaviour. The link between female gender and risk management behaviour is not supported after controlling for individual risk attitudes. The authors provide evidence that females who succeed in financial services do not conform to traditional female stereotypes. Practical implications Findings suggest financial institutions should hire/retain more older workers and those with lower risk tolerance to improve risk management. Hiring more females, however, is not likely to lead to better risk management. Originality/value The paper is the first to investigate risk management behaviour in financial services staff. The research exploits a unique, difficult to obtain data set.

scholarly journals RISK MANAGEMENT IN THE PROVISION OF PEOPLE’S BUSINESS CREDIT AS IMPLEMENTATION OF PRUDENTIAL PRINCIPLES

2019 ◽  
Vol 4 (2) ◽  
pp. 194
Author(s):  
Hari Sutra Disemadi
Keyword(s):  
Risk Management ◽  
Human Resources ◽  
Financial Services ◽  
Commercial Banks ◽  
Financial Institution ◽  
Economic Conditions ◽  
The Public ◽  
Banking Risk

The bank is a financial institution that has an intermediary function that bridges the interests of parties who are excess funds (creditors) and those who need funds (debtors). Banks in channeling funds, among others, through the provision of credit to the public. However, loans issued by banks contain a lot of risk, one of them is People's Business Credit (KUR). Issues regarding the risks of granting credit above will be discussed in this study, which this study uses a normative juridical method using the statutory approach. This study shows the arrangements regarding risk management are regulated in PBI Number 11/25/PBI/2009 concerning the Application of Risk Management in Commercial Banks and in Regulation of the Financial Services Authority Number 18 / POJK.03 / 2016 Regarding the Implementation of Risk Management for Commercial Banks. The implementation of the prudential principle internally for a bank's Human Resources (HR) is to apply the Banking Risk Management Principles. Banking practices usually assess five aspects of debtors (the five C’s analysis), namely: character, capital, capacity, economic conditions and collateral.

RiskTRACK: the five-factor model for measuring risk tolerance

2016 ◽  
Vol 17 (4) ◽  
pp. 428-445 ◽  
Author(s):  
Hunter Matthew Holzhauer ◽  
Xing Lu ◽  
Robert McLeod ◽  
Jun Wang
Keyword(s):  
Risk Management ◽  
Risk Factor ◽  
Portfolio Management ◽  
Financial Services ◽  
Five Factor Model ◽  
Risk Tolerance ◽  
Future Research ◽  
Content Type ◽  
Practical Applications ◽  
Tolerance Model

Purpose Currently, few academics agree on a standard and scientific way to measure risk tolerance. This paper aims to create a unique model for empirically measuring risk tolerance and to make a strong contribution to the growing literature in risk tolerance and risk management. Design/methodology/approach The authors use factor analysis and regression analysis to identify relevant factors for measuring risk tolerance. Findings The risk tolerance model is based on the acronymed model riskTRACK, which includes the five significant factors this paper identifies for measuring risk tolerance: traditional risk factor, reflective risk factor, allocation risk factor, capacity risk factor and knowledge risk factor. Research limitations/implications Uses for future research streams devoted to risk tolerance and risk management. Practical implications The results also have practical applications for the financial services industry, particularly risk management, portfolio management and financial planning. Originality/value In sum, this research expands previous research in risk tolerance and also adds to the growing literature in risk management. Once again, this paper is unique in that the authors develop a valid and reliable risk tolerance model based on five specific factors for measuring risk tolerance.

scholarly journals Relationship between Biopsychosocial Factors and Financial Risk Tolerance: An Empirical Study

2016 ◽  
Vol 41 (2) ◽  
pp. 117-131 ◽  
Author(s):  
M Kannadhasan ◽  
S Aramvalarthan ◽  
S K Mitra ◽  
Vinay Goyal
Keyword(s):  
Financial Services ◽  
Sensation Seeking ◽  
Financial Risk ◽  
Risk Tolerance ◽  
Wealth Accumulation ◽  
Cross Sectional Survey ◽  
Executive Summary ◽  
Cross Sectional ◽  
Retail Investors ◽  
Financial Risk Tolerance

Executive SummaryFinancial risk tolerance (FRT) refers to the retail investors’ willingness to accept the negative changes in the value of investment or an outcome that is adversely different from the expected one. Understanding and assessing FRT plays a crucial role in individual choices about wealth accumulation, portfolio allocation, and all other investment and finance-related decisions, and in achieving financial goals. An advisor has to accurately assess FRT for achieving his/her goal or investor’s goal. Failure to do so leads to the choice of an investment option/portfolio which is inconsistent with one’s FRT, resulting in investor disappointment, that is, unbearable loss to the client. Such a situation may adversely affect the client–advisor relationship.Measuring FRT is challenging as it is a multidimensional attitude. Besides, it is an elusive concept that appears to be influenced by a number of predisposing factors such as demographic, environmental, and psychosocial factors. This study aims to identify the factors that are related to risk tolerance from outside the financial services domain such as psychology, economics, and bio-sociology. It deals most specifically with the relationship between biopsychosocial factors and FRT. Those who are interested in assessing and predicting FRT can move closer to a theoretical account that blends psychological and economic insights and supplements the understanding of risk-taking attitudes and behaviour of retail investors. Such an understanding will help financial advisors, policy makers, and researchers in identifying the determinants of an individual’s FRT to suggest the suitable investment alternatives to their clients.A single cross-sectional survey was conducted among 951 retail investors with various levels of investment experience through a structured questionnaire covering a variety of demographic factors. An analysis of the data collected through the questionnaire indicates that all the three factors—self-esteem, personality type, and sensation seeking—are positively related to FRT. This study adds to the extant literature on psychological determinants of FRT.

scholarly journals Derivatives in South Africa – an empirical investigation

2011 ◽  
Vol 1 (1) ◽  
pp. 68-84
Author(s):  
Stefan Schwegler ◽  
Suzette Viviers
Keyword(s):  
South Africa ◽  
Financial Markets ◽  
Financial Services ◽  
Empirical Investigation ◽  
Risk Tolerance ◽  
Financial Services Industry ◽  
Price Determination ◽  
Over The Counter ◽  
Derivative Instruments ◽  
Level Of Risk

This paper, which is the second of a two-part series, presents the empirical findings of testing a number of variables influencing investors’ decisions to use derivatives in their portfolios. Five variables were deemed very important by a sample of 21 experts in the financial services industry in South Africa. These were: the level of information available (including the transparency of price determination); investor’s knowledge of different derivative instruments; investor’s level of risk tolerance; the level of liquidity in the market; and investor’s knowledge of and familiarity with financial markets. Education is required to change negative sentiments regarding derivatives and more regulation is called for, especially in over-the-counter markets.

scholarly journals Women's Risk Tolerance in Indonesia

2020 ◽  
Vol 3 (2) ◽  
pp. 87-102
Author(s):  
Firda Nosita
Keyword(s):  
Risk Factors ◽  
Data Collection ◽  
Financial Literacy ◽  
Financial Services ◽  
Risk Tolerance ◽  
Public Knowledge ◽  
Financial Decisions ◽  
Financial Products ◽  
The Government

The Financial Services Authority (OJK) survey on 2016 shows that the financial literacy index in Indonesia is 21.8% approximately. There are a lot of illegal investment in the Indonesian society in recent years is proof that the Indonesian people have not been well-literated and have not fully understood the benefits and risks of investment. Efforts to improve financial literacy are aimed at certain groups of people such as women and housewives. Risk factors are important in financial decisions. Previous research has concluded that women often avoid risk and are more intolerant of risk than men. This study aims to determine whether risk tolerance in women is different from men. Data collection techniques were carried out using questionnaires distributed online to 850 samples of Indonesian people representing three regions of Indonesia, namely the western, central and eastern regions of Indonesia. The results showed that there were no significant differences between women and men in terms of risk tolerance, these results indicate that both women and men have identical viewpoint of risk. The government could conduct education and increase public knowledge without differentiating financial products for women and men.

scholarly journals The role of financial literacy and risk tolerance: an analysis of genderdifferences in the textile sector of Pakistan

2021 ◽  
Vol 72 (03) ◽  
pp. 300-308
Author(s):  
LI NAIWEN ◽  
ZHANG WENJU ◽  
MUHAMMAD MOHSIN ◽  
MUHAMMAD ZIA UR REHMAN ◽  
SOBIA NASEEM ◽  
...  
Keyword(s):  
Financial Literacy ◽  
Financial Services ◽  
Investment Decision ◽  
Vital Role ◽  
Risk Tolerance ◽  
Investment Planning ◽  
Investment Decision Making ◽  
Literacy Level ◽  
Textile Sector

This research explores the effect of financial literacy and risk tolerance on decisions making for investment by men andwomen in the textile sector of Pakistan. It examines the role of risk tolerance as mediator in relation between financialliteracy and individual’s investment decision making. It also examines the moderating effect of gender differencebetween financial literacy and risk tolerance. Collection of research data was done from the 300 respondents in thetextile sector of Faisalabad through the self-administered questionnaire by using convenient sampling. This researchwork represented the facts that financial literacy has a positive and significant relationship with risk tolerance, andinvestment decisions are significantly influenced by it. Risk tolerance has a positive and insignificant impact oninvestment decisions.In contrast, the mediation role of risk tolerance is insignificant between the financial literacy level of individuals anddecisions made by them for investment. The purpose of a moderator as gender differences is significant. This studyempowers managers to provide basics financial services to employees. Management might be guided that what shouldbe highlighted and what has to be improved to enhance the financial literacy level of textile workers. Employers can playa vital role in building awareness and to educate their employees on fiscal wellness, investment planning, andretirement. Financial literacy can also help employees to achieve commercial success, and it is fruitful in providingbenefit plans at work and in their financial affairs

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