scholarly journals The Relationship between Risk Propensity, Risk Perception and Risk-Taking Behaviour in an Emerging Market

2013 ◽  
Author(s):  
Fazelina Sahul Hamid ◽  
Gary John Rangel ◽  
Fauziah M. Taib ◽  
Ramayah Thurasamy
Keyword(s):  
Risk Perception ◽  
Risk Taking ◽  
Emerging Market ◽  
Investment Decision ◽  
Primary Data ◽  
Thought Processes ◽  
Risk Propensity ◽  
Risky Behaviour ◽  
Behavioural Characteristics ◽  
The Relationship

This paper reports evidence to support a relationship between risk propensity, risk perception, and risk-taking behaviour of investors in an emerging market. Primary data were gathered using a validated structured questionnaire, which was self-administered by respondents: there were 162 investors from 8 stockbroking companies. A multiple regression was used to test the direct and indirect effects of the identified behavioural characteristics on investment decision. Risk propensity was found to be positively related to risk-taking behaviour whereas risk perception was negatively related to risk-taking behaviour. It was further found that risk perception partially mediates the effect of propensity to take risk. This suggests that the perceptual framing of a situational context in the investors’ thought processes reduces but it does not totally overwhelm the innate personality traits with respect to either the investor’s risk-seeking or risk-averseness. The tendency to engage in risky behaviour is more psychological in nature. The implications of the research are further explored.  

scholarly journals Irrational Behaviour and Stock Investment Decision. Does Gender Matter?

2021 ◽  
Vol 11 (2) ◽  
pp. 2185-2204
Author(s):  
M. Siraji ◽  
Na zar ◽  
M.S. Ishar Ali
Keyword(s):  
Risk Perception ◽  
Investment Decision ◽  
Primary Data ◽  
Disposition Effect ◽  
Individual Investors ◽  
Financial Advisors ◽  
Stock Investment ◽  
Irrational Behaviour ◽  
The Individual ◽  
The Right

The research aims to examine the influence of irrational behaviour on stock investment decision, specifically, anchoring, disposition effect, home bias, herding, overconfidence and the risk perception. The research further investigates the moderating role of gender between irrational behaviour and stock investment decision. Finally, it reveals which irrational behaviour is most prevalent. A survey collected the primary data from 425 individual investors. The survey evidence shows that, of six irrational behaviours, anchoring, disposition effect, overconfidence and risk perception were influence the investment decision of individual investors, and risk perception comes out to be the significant irrational behaviour on stock investment decision. It further explores that gender has a significant moderation for anchoring, disposition effect, herding, overconfidence, risk perception, and stock investment decision. We recommend that if individuals are aware of the behavioural biases, it will help them for making the right stock investment decisions. The study also relevant for financial advisors, stockbrokers and policymakers as it facilitates them in gaining a better understanding of their clients’ irrational behaviour. The present study gives a unique insight into the individual investors’ profile of gender corresponding to each main irrational behaviour on investment decision under consideration of stock investment.

scholarly journals An Empirical Study on the Determinants of an Investor’s Decision in Unit Trust Investment

Economies ◽  
2019 ◽  
Vol 7 (3) ◽  
pp. 80
Author(s):  
Annamalah ◽  
Raman ◽  
Marthandan ◽  
Logeswaran
Keyword(s):  
Empirical Study ◽  
Risk Taking ◽  
Investment Decision ◽  
Sampling Technique ◽  
Primary Data ◽  
Research Approach ◽  
Sources Of Information ◽  
Cross Sectional ◽  
Financial Status ◽  
Unit Trust

Unit trust is a convenient way of investing and a sensible way to build one’s wealth in the medium term and subsequently in the long-term. Investment specialists will manage the investments and spread the risks through careful diversification. The basic nature of the unit trust is that it carries a low-level of risks and accordingly determines a lower level of returns compared to other financial instruments. There is a lack of research that empirically investigates the factors that influence an investor’s decision in unit trust investment, particularly in a Malaysian setting. The purpose of this study is to analyse the factors that influence an investor’s investment decision in purchasing a unit trust. This paper aims to narrow this research gap, whereby financial status, risk taking behaviour, investment revenue and related information are hypothesized to exert statistically significant influences on the investor’s decision in unit trust investment. The empirical study uses a quantitative research approach whereby survey data have been sampled from 202 participants using a convenient sampling technique. This research is cross-sectional and uses primary data for analysis. Data analysis has been carried out using multiple regression analysis. The empirical research finds that financial status, risk taking behaviour, and sources of information significantly influence the investors’ investment behaviours in unit trusts. However, there was not enough evidence to support the claims that investment return and revenue have a statistical relationship to the investors investment behaviours regarding unit trusts. The findings from this research will have huge implications for investors and for financial institutions. This paper helps fund managers and brokers to understand the behaviours of an individual investor in response to a unit trust. On the other hand, this helps them to better target their customers, and persuade customers to make their investments in a unit trust effectively and efficiently, thereby helping them to manage their financial wealth with less risk but better future prospects.

scholarly journals Impact of positive illusions and experience on decision to invest in own new venture

2021 ◽  
Vol 65 (3) ◽  
pp. 269-285
Author(s):  
Andrea Zelienková ◽  
Keyword(s):  
Risk Taking ◽  
Investment Decision ◽  
Illusion Of Control ◽  
Risk Attitudes ◽  
Positive Illusions ◽  
Unrealistic Optimism ◽  
Positive Events ◽  
Opportunity Evaluation ◽  
The Relationship ◽  
Process Macro

Objectives. The objective of this study is threefold: 1) to examine the effect of positive illusions on risk taking manifested in opportunity evaluation and investment decision; 2) to examine the mediating role of risk attitudes on the relationship between positive illusions and risk taking manifested in opportunity evaluation and investment decision; 3) to examine the moderating effect of experience on the relationship between positive illusions and risk taking manifested in opportunity evaluation and investment decision. Sample and setting. Research sample comprised 132 entrepreneurs aged between 19 and 63 (M = 40.6; SD = 10.8) owning small, medium, and large-sized businesses. Hypotheses. 1) Individuals exhibiting higher positive illusions (overconfidence, unrealistic optimism, illusion of control) would take higher risk manifested in opportunity evaluation and investment decision. 2) Risk attitudes will mediate the relationship between positive illusions and risk taking manifested in opportunity evaluation and investment decision. 3) Experience will moderate the relationship between positive illusions and risk taking manifested in opportunity evaluation and investment decision. Statistical analysis and results. 1) Using simple linear regression it was found that only unrealistic optimism for rare positive events and illusion of control predicted risk taking manifested in investment decision. None of positive illusions explained opportunity evaluation. 2) Using PROCESS macro for mediation analysis it was found that domain-specific risk perception, rather than general risk tolerance, is statistically significant mediator of the relationship between unrealistic optimism for rare positive events and investment decision. 3) Moderation analysis via PROCESS macro showed that only entrepreneurial experience moderates the relationship between unrealistic optimism for rare positive events and investment decision using own savings. The limitations concerning gender and domain specificity of methods are discussed in the study.

scholarly journals Role of Managerial Competencies and Risk-Taking Behavior in Financial Service Outreach of Microfinance Banks in Pakistan

2019 ◽  
Vol 15 (2) ◽  
pp. 25-42
Author(s):  
Fozia Taj ◽  
Keyword(s):  
Risk Taking ◽  
Positive Relationship ◽  
Financial Service ◽  
Primary Data ◽  
Managerial Competencies ◽  
Managerial Risk ◽  
Calculated Risk ◽  
Risk Taking Behavior ◽  
The Relationship

This study aims to investigate the relationship between the managerial risk-taking, managerial competencies and financial service outreach of microfinance banks in Pakistan. Primary data was collected from 36 branches of microfinance banks (MFBs) in nine cities. The unit of investigation is the branch manager and senior credit officer of each MFB branch. Descriptive statistics, correlation and regression, are used for data analysis. This study found a positive relationship between financial service outreach of MFBs and managerial competencies; financial service outreach also has a positive relationship with the risk-taking behavior of managers. There is a positive relationship between risk-taking behavior and financial service outreach of banks. The risk-taking behavior partially mediates the relationship between the managerial competencies and financial service outreach. The magnitude of the relationship between managerial competencies and outreach is significant, and its magnitude reduces when there is the mediation of managerial risk-taking behavior between them. Thus, managerial competencies, along with risk-taking behavior are the keys drivers of financial service outreach of MFBs. This study informs MFB’s top management and policymakers that competencies of managers and their calculated risk-taking propensities determined outreach performance of the MFBs.

scholarly journals Sentiments–Risk Relationship across the Corporate Life Cycle: Evidence from an Emerging Market

Economies ◽  
2021 ◽  
Vol 9 (3) ◽  
pp. 111
Author(s):  
Minhas Akbar ◽  
Ahsan Akbar ◽  
Muhammad Azeem Qureshi ◽  
Petra Poulova
Keyword(s):  
Life Cycle ◽  
Risk Taking ◽  
Emerging Market ◽  
Generalized Method Of Moments ◽  
Life Cycle Stage ◽  
Risk Propensity ◽  
Bankruptcy Risk ◽  
Growth Firms ◽  
Corporate Life Cycle ◽  
Investment Portfolios

The influence of market sentiments on the bankruptcy risk propensity of firms has been extensively explored in the literature. However, less attention has been paid to whether the corporate life cycle plays any role in this nexus. The purpose of this research is to unveil how the corporate bankruptcy risk propensity responds to market sentiments, and whether this sentiments–risk relationship varies over different stages of the corporate life cycle. Using a sample of 301 Pakistani non-financial listed firms for 2005–2014, we employ two-step generalized method of moments (GMM) regression estimation to address the issue of endogeneity. Empirical evidence reveals that managers tend to escalate a firm’s bankruptcy risk during high market sentiments. Further analysis indicates that during the period of positive market sentiments, introduction stage firms prefer to assume the highest bankruptcy risk followed by decline and growth firms, while mature firms continue to be risk-averse. This research contributes to the corporate finance literature by suggesting that managerial risk-taking is influenced by market sentiments and corporate managers show a different attitude towards risk at different stages of the corporate life cycle. Therefore, to ensure enterprise sustainability, capital market regulators should have a robust risk management framework in place to discipline the excessive risk-taking by firm managers over different stages of the corporate life cycle. Moreover, investors and creditors shall take into consideration the respective life cycle stage of the firm to minimize the risk exposure of their investment portfolios. Our results are robust to alternate econometric specifications and alternate variable specifications.

The impact of multimarket contacts on bank stability in Vietnam

2019 ◽  
Vol 31 (3) ◽  
pp. 336-357 ◽  
Author(s):  
Tu DQ Le ◽  
Son H. Tran ◽  
Liem T. Nguyen
Keyword(s):  
Risk Taking ◽  
Emerging Market ◽  
Generalized Method Of Moments ◽  
Banking System ◽  
Asia Pacific ◽  
Asia Pacific Region ◽  
Bank Stability ◽  
Content Type ◽  
The Impact ◽  
The Relationship

Purpose The purpose of this study is to investigate the impact of multimarket contacts on bank stability in the Vietnamese banking system between 2006 and 2015. Design/methodology/approach The system generalized method of moments proposed by Arellano and Bover (1995) is used to examine the relationship between multimarket contacts and bank stability. Findings The findings show that multimarket contacts among Vietnamese commercial banks improve bank stability. In addition, more x-efficient banks appear to be more stable. The same is true for banks with less holding liquid assets, for those with less excessive lending, for smaller banks, for those with the greater level of intermediation and for those with a higher level of foreign ownership. Listed banks are found to be less-risk taking than unlisted banks. Originality/value This study is the first attempt to examine the relationship between multimarket contacts and bank stability in an emerging market in the Asia-Pacific region.

scholarly journals Xenophobia in the Time of a Pandemic: Social Media Use, Stereotypes, and Prejudice against Immigrants during the COVID-19 Crisis

2021 ◽  
Author(s):  
Saifuddin Ahmed ◽  
Vivian Chen Hsueh-Hua ◽  
Arul Indrasen Chib
Keyword(s):  
Social Media ◽  
Risk Perception ◽  
Social Trust ◽  
Disease Risk ◽  
Media Use ◽  
Political Trust ◽  
Primary Data ◽  
Social Media Use ◽  
Network Characteristics ◽  
The Relationship

Abstract This study examines the relationship between social media use, disease risk perception, social and political trust, and out-group stereotyping and prejudice during a social upheaval. Analyses of primary data collected during the COVID-19 outbreak in Singapore found that disease risk perception is positively related to stereotyping and prejudice against Chinese immigrants. Individuals who used social media for news were more likely to stereotype and express prejudice. However, those who engaged in frequent heterogenous discussions, and had more extensive social networks, were less likely to stereotype and express prejudice. Higher social and political trust was also associated with lower stereotyping and prejudice. Finally, moderation effects of network characteristics on the relationship between risk perception, social trust, and prejudice were observed.

scholarly journals The Relationship of Risk Perceptions and Risk-Taking with Humor Styles: Mediating Role of Self-Control

2020 ◽  
Author(s):  
Malahat Amania ◽  
Mahboobeh Mansuria
Keyword(s):  
Risk Perception ◽  
Path Analysis ◽  
Risk Taking ◽  
Risk Perceptions ◽  
Risky Behaviors ◽  
Self Control ◽  
Humor Styles ◽  
Humor Style ◽  
Aggressive Humor ◽  
The Relationship

Background: Humor, as a form of social risk-taking is observed more frequently among individuals with risky behaviors. It seems that self-control is related to risky behaviors and humor styles. Based on the recommendations of past studies, the present study was conducted to investigate whether self-controlmediates the relationship between risk perception and risk-taking with humor styles. Methods: The statistical population included students of Bojnord University in the academic year of 2019. A sample of 380 students was selected by stratified random sampling. They completed the humor style questionnaire, self-control questionnaire, and domain-specific risk-taking scale. The data were analyzed by SPSS software version 23 and the tests of correlation and path analysis. Results: The results showed that adaptive humor styles were not significantly related to self-control and risk-taking; only the affiliative humor style had a negative correlation with risk perceptions. Maladaptive humor styles correlated significantly with self-control and risk-taking; only an aggressive humor style was related to positive risk perceptions. Path analysis showed that self-control affected the aggressive humor style (β = -.45, p < .0001) and self-defeating style (β = -.23, p < .0001), risk perception had a direct effect on aggressive humor style (β = .10, p < .012), and risk-taking affected the aggressive humor (β = -.19, p < .0001) and self-defeating (β = -.11, p < .016). Also, risk-taking through self-control affected aggressive humor style and self-defeating humor style significantly. The results of the goodness of fit in the modified model showed that the value of χ2, GFI, AGFI, CFI, and RMSEA were.13, 1, .99, 1, and .0001, respectively and all these indices were at an acceptable level. Conclusion: Individuals with high self-control take more risk and use less maladaptive humor styles. Individuals with weak ability cannot control their feelings, which results in maladaptive humor styles in interpersonal relationships.

scholarly journals Applying an Evolutionary Approach of Risk-Taking Behaviors in Adolescents

2022 ◽  
Vol 12 ◽  
Author(s):  
Javier Salas-Rodríguez ◽  
Luis Gómez-Jacinto ◽  
Isabel Hombrados-Mendieta ◽  
Natalia del Pino-Brunet
Keyword(s):  
Sex Differences ◽  
Risk Perception ◽  
Risk Taking ◽  
Lower Risk ◽  
Female Adolescents ◽  
Risk Propensity ◽  
Male Adolescents ◽  
Potential Benefits ◽  
Expected Benefits ◽  
Risk Taking Behaviors

Risk-taking behaviors in adolescents have traditionally been analyzed from a psychopathological approach, with an excessive emphasis on their potential costs. From evolutionary theory we propose that risk-taking behaviors can be means through which adolescents obtain potential benefits for survival and reproduction. The present study analyses sex differences in three contexts of risk (i.e., risk propensity, expected benefits and risk perception) in the evolutionary specific domains and the predictive value of these domains over risk-taking behaviors, separately in female and male adolescents. 749 adolescents (females = 370) valued their risk perception, expected benefits and risk propensity through the Evolutionary Domain-Specific Risk Scale, as well as their engagement in risk-taking behaviors through the Risky Behavior Questionnaire. Male adolescents showed lower risk perception in two evolutionary domains, expected higher benefits in two other domains and showed higher risk propensity in six domains. Female adolescents showed lower risk perception in two domains. Additionally, risk perception, expected benefits and risk propensity in the evolutionary domains predicted the engagement in risk-taking behaviors in male adolescents, whereas in female adolescents only expected benefits and risk propensity showed a predictive effect over risk-taking behaviors. These results suggest the potential role of evolutionary mechanisms on risk-taking behaviors in adolescents. Results have practical implications for interventions programs aimed at reducing risk-taking behaviors. In addition to considering sex differences, intervention programs should consider alternative behaviors through which adolescents can reach their evolutionary goals, and handle the risks related to those behaviors that cannot be replaced but have potential benefits for adolescents.

scholarly journals Executive compensation and corporate performance: Evidence from Jordanian commercial banks

2018 ◽  
Vol 14 (2) ◽  
pp. 38-44 ◽  
Author(s):  
Majd Iskandrani ◽  
Hadeel Yaseen ◽  
Asma’a Al-Amarneh
Keyword(s):  
Corporate Governance ◽  
Executive Compensation ◽  
Commercial Banks ◽  
Ceo Compensation ◽  
Corporate Performance ◽  
Stock Exchange ◽  
Emerging Market ◽  
Primary Data ◽  
The Impact ◽  
The Relationship

The wave of the recent financial crisis has reawakened interest in corporate governance as well as the relationship between executive compensation and corporate performance. Notably, corporate governance has been presented as a mechanism to absorb fiscal crisis faced in emerging economies. The principal aim of this study is to investigate the relationship between CEO compensation and corporate performance among commercial banks operating in a small emerging market, namely Jordan. Primary data were collected for a sample of 13 Jordanian commercial banks listed at Amman Stock Exchange (ASE) during the period of 2010 -2016. The findings of this paper suggest that corporate performance measured by return on equity (ROE) and return on assets (ROA) has no influence on CEO compensation. Furthermore, this paper examines the impact of a firm’s size on the relationship between CEO compensation and corporate performance. The results reveal a significant relationship between executive compensation and firm’s performance among the smaller sample firms.

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