scholarly journals The effect of age and gender on financial risk tolerance of South African investors

2018 ◽  
Vol 15 (2) ◽  
pp. 96-103 ◽  
Author(s):  
Zandri Dickason ◽  
Sune J. Ferreira
Keyword(s):  
South African ◽  
Financial Risk ◽  
Risk Tolerance ◽  
Financial Decisions ◽  
Investment Companies ◽  
Risk Profiling ◽  
Gender And Age ◽  
And Gender ◽  
Financial Risk Tolerance ◽  
Effect Of Age

Financial risk tolerance refers to the amount of risk a person is willing to take when making financial decisions. Previous researchers have found that demographic factors when used as independent variables to have an effect on the risk tolerance behavior of investors. Within this study, emphasis was given to gender and age within a sample of South African investors. Not much research on risk tolerance and demographics has been done in South Africa. Hence, an opportunity for further research within this field emerged. This study aimed to contribute towards the accurate risk profiling of South African investors based on their level of risk tolerance considering their gender and age. This study can be used as a future forecasting tool for investment companies to predict risk tolerance levels based on gender and age levels. Results from this study correspond to previous studies where male investors are more risk tolerant than female investors. A statistical difference was also found between male and female investors within the age categories of 35-49 years and investors older than 50 years. All age categories were found to be more risk tolerant for investors older than 50 years based on the binary regression.

Risk Tolerance Profiling Measure: Testing Its Reliability and Validities

2020 ◽  
pp. JFCP-19-00033
Author(s):  
Wee Kang Chung ◽  
Wing Tung Au
Keyword(s):  
Predictive Validity ◽  
Financial Institutions ◽  
Financial Risk ◽  
Risk Tolerance ◽  
Risk Profiling ◽  
Loss Data ◽  
Loss Tolerance ◽  
Investment Experience ◽  
Financial Risk Tolerance ◽  
Incremental Predictive Validity

This study examines the degree to which the customer risk profiling measure (CRPM), commonly used by financial institutions to determine loss tolerance of investors, is psychometrically valid in assessing risk tolerance and predicting anxiety after experiencing a significant investment loss. Data were collected online from 91 respondents with various investment experience, Results suggest that CPRM is significantly correlated with the Grable and Lytton's Financial Risk Tolerance Scale (G/L-RTS), a validated financial risk tolerance measure. CPRM is also able to predict anxiety after experiencing a significant investment loss. Furthermore, CRPM also demonstrates incremental predictive validity above and beyond G/L-RTS in predicting anxiety after investment loss.

scholarly journals Factors Influencing Financial Risk Tolerance: A Review

2021 ◽  
Vol 12 (1) ◽  
pp. 296-305
Author(s):  
Mubarokah Bunyamin ◽  
Norwazli Abdul Wahab
Keyword(s):  
Financial Market ◽  
Financial Risk ◽  
Industrial Revolution ◽  
Well Being ◽  
Risk Tolerance ◽  
Geographical Differences ◽  
Health Crisis ◽  
Factors Affecting ◽  
Financial Decisions ◽  
Financial Risk Tolerance

High financial risk tolerance level encourages investors’ participation  in financial market. Thus, elevate their capabilities to achieve their financial goals and support national economic growth and well-being. This paper aims to investigate the factors affecting financial risk tolerance from studies around the globe. A comprehensive review of financial risk tolerance is carried out with a particular attention on factors that impact financial risk tolerance on financial decisions. This study indicates that financial risk tolerance can be explained by demographic profiles, psychology, social, geographical differences, and financial capability factors. These  findings will be useful to professionals, technologists, and financial institutions to identify potential investors based on the indicators concluded with the suggestion on financial technology (FinTech) utilisation. Hence, encouraging participation in the Malaysian financial market during global health crisis and  reaching  economic  well-being  towards industrial revolution 4.0 (IR 4.0).

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.

scholarly journals Determinants of Financial and Non-Financial Risk Tolerance among Students at Selected South African Universities

2018 ◽  
Vol 10 (1) ◽  
pp. 293-302
Author(s):  
Pfano Michael Ramudzuli ◽  
Paul-Francois Muzindutsi
Keyword(s):  
South African ◽  
Significant Influence ◽  
Financial Risk ◽  
Demographic Factors ◽  
Binary Logistic Regression ◽  
Risk Tolerance ◽  
Financial Risks ◽  
Allocation Process ◽  
South African Universities ◽  
Financial Risk Tolerance

Abstract To enhance the portfolio allocation process, individuals need to understand their financial ability and psychological willingness to tolerate risks. To do this, their risk tolerance level must be quantified. This study used a survey questionnaire to collect data from 470 students at selected South African universities, and a binary logistic regression to test the effect of demographic factors on financial risk tolerance versus non-financial risk tolerance. Our findings suggest that the level of risk tolerance cannot be generalized across different risk domains. We also found that demographic factors affect the two domains of risk tolerance differently. Specifically, age did not have a significant influence on financial risk tolerance, while it significantly increased non-financial risk tolerance. Similarly, gender did not have any significant influence on non-financial risk tolerance, while it positively affect-ed financial risk tolerance. Furthermore, students in the fields of the humanities, engineering and IT showed a strong appetite for non-financial risks, but students in the commerce faculty preferred financial risks.

scholarly journals The Relationship of Investor’s Demographic Traits and Personality Type with Financial Risk Tolerance in Investment Decisions.

2019 ◽  
Vol 6 (1) ◽  
pp. 87
Author(s):  
Muhammad Nauman Sadiq ◽  
Muhammad Akhtar
Keyword(s):  
Financial Risk ◽  
Personality Type ◽  
Risk Tolerance ◽  
Academic Qualification ◽  
Demographic Traits ◽  
Type A Personality ◽  
And Gender ◽  
Risk Taker ◽  
Relationship Of ◽  
Financial Risk Tolerance

With an assorted sample of customers from various banks of Pakistan, the authors tried to establish relationship of investor’s demographic traits and personality type with financial risk tolerance during the choice of investment. Results provide sustenance for the projected hypotheses such as investor’s age, income, financial knowledge, family size, occupation and academic qualification has association with financial risk tolerance capability.Investors doing service in an organization tolerate more risk as compare to the investor having their own business. However, Investors marital status and gender has no effect on financial risk tolerance. Investor either married or unmarried showed similar attitude toward financial risk tolerance. Empirical results also provide evidence that investors having type A personality are more financial risk taker as compare to type B personality.

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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