Self-Assessments of Risk Tolerance by Women and Men

2007 ◽  
Vol 100 (3) ◽  
pp. 795-802 ◽  
Author(s):  
John E. Grable ◽  
Michael J. Roszkowski
Keyword(s):  
Financial Risk ◽  
Rating Scale ◽  
Risk Tolerance ◽  
Convenience Sample ◽  
Self Rating ◽  
Internet Users ◽  
Point Rating Scale ◽  
Self Assessments ◽  
Financial Risk Tolerance ◽  
The Relationship

A convenience sample of 1,741 Internet users completed a 12-item financial risk-tolerance questionnaire. They also rated themselves on their tolerance for financial risk using a 4-point rating scale. The 12-item summated rating score was used to predict the self-rating. The residual between actual and predicted self-rating was compared by sex. The residual for males was positive, indicating that men tended to overestimate their proclivity for taking risks. Conversely, the residual for females was negative, suggesting that women underestimate their tolerance for risk. The relationship held when controlling for other factors linked to risk tolerance, i.e., age, household income, marital status, and education. It was also noted that risk tolerance was overestimated by younger respondents and those with a graduate education.

scholarly journals The Effect of Financial Risk Tolerance and Family Income on Entrepreneurial Intention in Higher Education Sector of District Swabi

2021 ◽  
Vol VI (I) ◽  
pp. 24-37
Author(s):  
Rehan Zeb ◽  
Naveed Hussain Shah ◽  
Muhammad Arif
Keyword(s):  
Higher Education ◽  
Sample Size ◽  
Financial Risk ◽  
Family Income ◽  
Entrepreneurial Intention ◽  
Risk Tolerance ◽  
Education Sector ◽  
Public And Private ◽  
Financial Risk Tolerance ◽  
The Relationship

The study examines the effect of family income (FI) and financial risk tolerance (FRT) on entrepreneurial intention in students of Universities of the Higher Education Sector located in district Swabi. This is an explanatory and co relational study carrying a sample size of 330 out of the total of all 501 students from public and private Universities in Swabi. Financial determinants are prominent aspects of the study contributing to entrepreneurial intention. The study has established the relationship between FI and FRT on EI of universities of the Higher Education Sector located in district Swabi. The study is a contribution to the rare work on the relationship between financial determinants and entrepreneurial intention. The study revealed that FI and FRT significantly affect EI, whereas the order of contribution of these determinants on EI are evident their coefficients are FRT and FI.

Stock Market Volatility and Changes in Financial Risk Tolerance During the Great Recession

2017 ◽  
Vol 28 (1) ◽  
pp. 140-154 ◽  
Author(s):  
Abed G. Rabbani ◽  
John E. Grable ◽  
Wookjae Heo ◽  
Liana Nobre ◽  
Stephen Kuzniak
Keyword(s):  
Great Recession ◽  
Financial Risk ◽  
Risk Tolerance ◽  
Market Volatility ◽  
Stock Market Volatility ◽  
The Great Recession ◽  
Standard And Poor's ◽  
Changes In Risk ◽  
Financial Risk Tolerance ◽  
The Relationship

This study investigated the degree to which the financial risk tolerance of individuals was influenced by volatility in the U.S. equities market during the period of the Great Recession. Based on data from a valid and reliable risk tolerance scale and return information for the Standard and Poor’s (S&P) 500 index, there does appear to be some associations between daily market volatility and changes in risk tolerance scores. Changes in risk tolerance scores were also calculated using short- and intermediate-term volatility measures. The relationships do vary, however, with evidence supporting the relationship only 64% of the time. Overall, changes in financial risk tolerance scores were found to be modest. Although not following hypothesized directions at all times, risk tolerance was not influenced by the length of volatility measurements.

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.

Behavioural propensities and financial risk tolerance: the moderating effect of ethnicity

2019 ◽  
Vol 15 (4) ◽  
pp. 728-745 ◽  
Author(s):  
Mahfuzur Rahman ◽  
Mohamed Albaity ◽  
Che Ruhana Isa
Keyword(s):  
Social Interaction ◽  
Undergraduate Students ◽  
Financial Risk ◽  
Design Methodology ◽  
Risk Tolerance ◽  
Moderating Effect ◽  
Business Economics ◽  
Content Type ◽  
Financial Risk Tolerance ◽  
The Relationship

Purpose The purpose of this paper is to explore the influence of several core behavioural propensities on financial risk tolerance (FRT). Additionally, this paper examines the moderating effect of ethnicity on the relationship between behavioural propensities and FRT. Design/methodology/approach A sample of 1,204 completed and usable questionnaires were collected from undergraduate students majoring in business, economics and finance and analysed them using SmartPLS 2.0 software. Findings The findings reveal that propensity for trust has the highest impact on FRT followed by propensity for regret and happiness in life, while propensity for social interaction is not significantly associated with FRT. Ethnicity significantly moderates the relationship between three behavioural propensities (propensity for regret, propensity for trust and happiness in life) and FRT. Originality/value This study contributes to the assessment of individuals’ FRT incorporating behavioural propensities, which in turn contributes to the field of behavioural finance.

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 A Canonical Analysis on the Relationship between Financial Risk Tolerance and Household Education Investment in Sri Lanka

2015 ◽  
Vol 1 (4) ◽  
pp. 7-23 ◽  
Author(s):  
Shirantha Heenkenda ◽  
D.P.S Chandrakumara
Keyword(s):  
Sri Lanka ◽  
Financial Risk ◽  
Household Head ◽  
Risk Tolerance ◽  
Social Sector ◽  
Education Investment ◽  
The Social ◽  
Financial Risk Tolerance ◽  
The Relationship ◽  
Income Quartile

This paper is aimed at examining the relationship between risk tolerance behaviour and the education investment of families in different social sectors, i.e. urban, rural, and estate, in Sri Lanka. At the initial step, the study used Binary Logistic Regression for identifying the significant variables for financial risk tolerance and for household investment on education. Having identified the two sets of variables for each domain, the second step was to apply the Canonical Analysis in order to examine the association between risk tolerance behaviour and education investment. The data for the study was obtained from a sample survey conducted in six Divisional Secretariat Divisions (DSDs) of three districts in Sri Lanka. The sample was selected considering the social sectors as strata, using multi-stage sampling technique joined with cluster sampling. The study found that ‘social sector’ and ‘education of household head’ were the main contributors to ‘household investment on education’. It revealed that when the ‘social sector’ changes from urban to rural and rural to estate there is a tendency of households to decrease the share of expenditure on education. However, the ‘education level of the household head’ had s significant positive impact for the investment in education. It also found that ‘income quartile, decision maker’, ‘income diversification’, and ‘financial literacy’ positively contributed to ‘risk tolerance behaviour’. However, the findings show that financial risk tolerance decreases with the distance of households to a financial institute. The canonical relationship shows a negative association between ‘income quartile’ and the ‘social sector’ and the ‘income quartile’ improves with the change of the ‘social sector’ from estate to rural and rural to urban. It also revealed that ‘income quartile’ was positively associated with the ‘education of the household head’. A primary conclusion can be arrived at that income and spatial related attributes are crucial in determining the impact of risk tolerance in household education investment. In addition, the study revealed that risk tolerance and, in turn, the tendency to invest in education increases with the change of gender from female to male. Therefore, it suggests that gender related attributes are also important in the financial risk tolerance and education investment.

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