Demographic Variables, Delay Discounting Models and Dysfunctional Personality Traits as Predictors of Financial Risk-Tolerance Among Community-Dwelling Italian Adults

2021 ◽  
pp. 026010792110321
Author(s):  
Antonella Somma ◽  
Rebecca Sergi ◽  
Chiara Pagliara ◽  
Clelia Di Serio ◽  
Andrea Fossati
Keyword(s):  
Personality Traits ◽  
Linear Combination ◽  
Delay Discounting ◽  
Financial Risk ◽  
Short Form ◽  
Demographic Variables ◽  
Risk Tolerance ◽  
Community Dwelling ◽  
Self Report ◽  
Financial Risk Tolerance

To evaluate the effect of demographic variables, delay discounting and dysfunctional personality traits on financial risk tolerance (FRT), 281 community-dwelling adults were administered the Italian translations of the Risk-Tolerance Scale (RTS), Monetary Choice Questionnaire, Probability Discounting Questionnaire, and Personality Inventory for DSM-5-Short Form (PID-5-SF) self-report questionnaires through an online platform. Hierarchical robust regression results showed that the linear combination of demographic variables (gender and active worker status), delay discounting measures and selected PID-5-SF trait scale scores (i.e., Attention Seeking and Risk Taking) explained roughly 39% of the RTS total score. As a whole, our findings underscore the role of demographic characteristics, dysfunctional personality traits and delay discounting in FRT expression. As a result, FRT is likely to represent the linear combination of several factors that should be assessed in order to understand FRT and prevent erroneous choices among lay investors.

Moderating Effect of Demographic Variables on the Relationship Between Personality Traits and Financial Risk Tolerance

2018 ◽  
pp. 122-135
Author(s):  
Sasmita Mishra ◽  
Manit Mishra
Keyword(s):  
Regression Analysis ◽  
Personality Traits ◽  
Financial Risk ◽  
Demographic Variables ◽  
Risk Tolerance ◽  
Stepwise Multiple Regression ◽  
Hierarchical Regression ◽  
Retail Investors ◽  
Financial Risk Tolerance ◽  
The Relationship

This paper explores the relationship between financial risk tolerance and its determinant – the personality traits of retail investors. This paper also explores the moderating effect of major demographic variables like gender, age and income on the relationship between financial risk tolerance personality traits of retail investors. Stepwise multiple regression analysis and Hierarchical regression analysis was used to identify patterns in the data obtained from 261 respondents. The Stepwise multiple regression analysis established a negative association of Conscientiousness with financial risk tolerance of retail investors. The hierarchical regression analysis suggested a major impact of conscientiousness on financial risk tolerance among young Indian investors.

scholarly journals FINANCIAL RISK TOLERANCE ANALYSIS OF INDONESIAN RETAIL INVESTORS

2020 ◽  
Vol 8 (4) ◽  
pp. 852-875
Author(s):  
Gatot Nazir Ahmad ◽  
Ari Warokka ◽  
Irna Puji Lestari
Keyword(s):  
Financial Risk ◽  
Online Survey ◽  
Tolerance Analysis ◽  
Sociodemographic Factors ◽  
Demographic Variables ◽  
Risk Tolerance ◽  
Retail Investors ◽  
Retail Investor ◽  
Different Characteristics ◽  
Financial Risk Tolerance

Purpose: This study aims to analyze how risk tolerance of Indonesian retail investors is based on sociodemographic characteristics and also related to the multidimensional risk Due to the different characteristics of investors turn out to become different levels of risk tolerance for each individual investor, hence considering investor's sociodemographic factors is very important in assessing risk tolerance. Methodology: This study used quantitative analysis. The random sampling was obtained from the sample cohorts, which consist of the Indonesian retail investor club. Data was collected through an online survey and gathered 407 respondents. Then, the data was analyzed by using PLS with Smart-PLS 3.0 software. Result: Our findings showed that the most of socio-demographic variables such as age, gender, marital status, education, and income affected the financial risk tolerance, whereas ethics do not affect financial risk tolerance. And risk capacity partially mediated socio-demographics on financial risk tolerance. Application: The investor and financial advisers would use this analysis in assessing risk tolerance and determining the best type of investment and best suits the risk preference of investors. Novelty: To the best our knowledge, this study is pretty scarce. Not like the previous studies, this research also use an advanced method which explores variables interdependency. This research is the first one in Indonesia, which compiles socio-demographic variables. And also it is an enriched empirical and literature manner.

Do sensation seeking, control orientation, ambiguity, and dishonesty traits affect financial risk tolerance?

2015 ◽  
Vol 42 (1) ◽  
pp. 34-41 ◽  
Author(s):  
Alan Wong ◽  
Bernie Carducci
Keyword(s):  
Locus Of Control ◽  
Personality Traits ◽  
Sensation Seeking ◽  
Financial Risk ◽  
Risk Tolerance ◽  
Ambiguity Tolerance ◽  
Criterion Variable ◽  
Content Type ◽  
Financial Risk Tolerance ◽  
The Relationship

Purpose – The purpose of this paper is to determine relationships between financial risk tolerance and the personality traits of sensation-seeking, locus of control, ambiguity tolerance, and financial dishonesty. Design/methodology/approach – A pretested questionnaire was used to gather information from 255 respondents. With risk tolerance as a criterion variable and the four personality traits as predictor variables, a regression procedure was performed to determine which variables contributed to the variability of the criterion variable and the extent of such contribution. An analysis was also done to find out whether gender, age, GPA, and academic standing had an influence on each personality trait’s contribution to risk tolerance. Findings – Risk tolerance is directly related to sensation-seeking and the link is so strong that it is not mitigated by the effects of gender, age, GPA, and college academic standings. As for locus of control, the more one believes one has control over one’s outcome, the higher risk one can tolerate. Surprisingly, there is no relationship between risk and ambiguity tolerances. Dishonesty also does not affect risk tolerance behavior. However, the relationship is found to exist among younger individuals and those with lower GPA, possibly due to not having reached an adequate level of matured or critical reasoning yet. Originality/value – The relationship between risk tolerance and sensation-seeking is an established fact but whether the relationship still holds across several demographic groups is part of this study’s focus. Although much has been done on risk tolerance, very little has been done on its relationship to locus of control, ambiguity tolerance, and financial dishonesty.

scholarly journals Interactive Impact of Demographic Variables and Personality Type on Risk Tolerance

2019 ◽  
Vol 5 (1) ◽  
pp. 42-54 ◽  
Author(s):  
Heena Thanki ◽  
Narayan Baser
Keyword(s):  
Marital Status ◽  
Financial Risk ◽  
Investment Decision ◽  
Real Life ◽  
Personality Type ◽  
Type A ◽  
Investment Strategy ◽  
Demographic Variables ◽  
Risk Tolerance ◽  
Financial Risk Tolerance

Investors’ investment decision is much dependent on his/her risk-taking capability, which in turn depends on a variety of factors. Majority of the studies carried out on this topic associate the financial risk tolerance (FRT) with demographics (gender, marital status, age, education income, etc.) of the investor. A handful of the studies on this topic establish a link between FRT and personality type. FRT refers to the investors’ ability to allow the uncertainty of returns while taking their investment decision. Most of the past studies on the related topics have taken Myers-Briggs Type Indicators (MBTI) or big five personality types, whereas the present study has taken Personality type A and B for finding its association with risk tolerance level. Identifying Personality type A and B is much easier and less time-consuming as compared to other models. Hence, in real life, financial planners also can use the outcome of this study in preparing the investment strategy for their clients. Past studies have focused either on demographics or on personality type, while the current study combines the effect of both the variables and adds to the existing literature. The present study adopts a single cross-sectional descriptive research design. To satisfy the objective, required data were gathered through a structured questionnaire with a “Financial Risk Tolerance Scale,” “Personality Scale,” and basic demographic questions using a convenience sampling methodology. An analysis of data indicates that personality type and demographic variables such as gender, marital status, occupation, and income are found significant in determining FRT of investor, while age and education are found insignificant.

Impact of Risk Tolerance and Demographic Factors on Financial Investment Decision

GIS Business ◽  
2018 ◽  
Vol 13 (5) ◽  
pp. 31-40
Author(s):  
Mitali Baruah ◽  
Abhishek Kirit kumar Parikh
Keyword(s):  
Financial Risk ◽  
Investment Decision ◽  
Demographic Factors ◽  
Demographic Variables ◽  
Risk Tolerance ◽  
Extensive Literature ◽  
Financial Investment ◽  
Financial Decisions ◽  
The Impact ◽  
Financial Risk Tolerance

Risk tolerance is popularly used in the personal financial planning industry to understand an investor’s attitude towards risk. In the twenty-first century, it is very important for the various investment firms, fund managers, financial planners to understand financial investment decisions of an investor for developing a strategy for the sale of their investment products in market. However, financial decisions of an individual not only depend on financial risk-tolerance level, but also upon different demographic factors. Thus, this study is undertaken to develop a model that helps in understanding impact of risk tolerance and demographic factors jointly on investment decision, especially, a decision related to level of investment. Also, investor may be having higher risk tolerance for the calculative investment but may be having lover risk tolerance in speculative investment. So, based on extensive literature support, this research has tried to propose a model for understanding the impact of investment risk tolerance, capital risk tolerance, speculative risk tolerance, and six important demographic variables jointly on investment decision. Thus, this study would be helpful to investment firms in understanding impact of risk tolerances and demographic variables jointly on level of investment of investors, which can be used for designing a strategy or investment product to offer to the investors with different levels of financial risk tolerance and different demographic profiles.

The Influence of Personality Traits on Households’ Financial Risk Tolerance and Financial Behaviour

2017 ◽  
Vol 30 (1) ◽  
pp. 32-54 ◽  
Author(s):  
Teerapong Pinjisakikool
Keyword(s):  
Personality Traits ◽  
Instrumental Variables ◽  
Big Five ◽  
Financial Risk ◽  
Big Five Personality Traits ◽  
Risk Tolerance ◽  
Big Five Personality ◽  
Financial Behaviour ◽  
Potential Factors ◽  
Financial Risk Tolerance

Using a large sample that can represent the Dutch population, this article mainly studies the determinants of financial risk tolerance. I propose that the big five personality traits are the potential factors that can explain differences in financial risk tolerance among individuals. Furthermore, this article examines the effect of personality traits on the actual financial behaviour of households through financial risk tolerance. I find that all the big five personality traits including extraversion, agreeableness, conscientiousness, emotional stability and intellect significantly predict financial risk tolerance. Additionally, these personality traits as instrumental variables can also indirectly predict the financial behaviour of households. JEL: D10, D14, D19

scholarly journals Financial knowledge and subjective financial risk tolerance among students at a South African University

2015 ◽  
Vol 5 (3) ◽  
pp. 180-185 ◽  
Author(s):  
Pfano Michael Ramudzuli ◽  
Paul-Francois Muzindutsi
Keyword(s):  
South African ◽  
Financial Risk ◽  
Binary Logistic Regression ◽  
Demographic Variables ◽  
Risk Tolerance ◽  
Financial Knowledge ◽  
Binary Logistic Regression Model ◽  
Gauteng Province ◽  
Number Of Factors ◽  
Financial Risk Tolerance

This study used a self-administered questionnaire to determine the effect of financial knowledge and other demographic variables on Financial Risk Tolerance (FRT) among South African University students. Descriptive statistics and a binary logistic regression model were used to analyse information from 330 participants selected from a South African University in the Gauteng province. The results indicated that the probability of being risk tolerant was high among students with financial knowledge compared to those without financial knowledge. Among demographic variables, monthly expenditure and religion were found to have a significant effect on Financial Risk Tolerance. The results of the study thus draw attention to a number of factors that can help investment managers in finding suitable financial products for their clientele

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