IMPACT OF DEMOGRAPHIC FACTORS ON RISK TOLERANCE

In general, the amount of risk an individual is willing to tolerate can be influenced by demographic factors. However, needs for research arise as to whether demographic factors influence the amount of risk investors in South Africa are willing to tolerate. The survey was conducted in 2017 and all South African investors were included in the sample frame. For this study, a sample of 800 was collected and used. Multinomial regression was used to indicate whether there were more than two factors that can influence the four risk tolerance levels of South African investors. The study suggested that gender is a determining factor in the risk tolerance of individuals. African investors were more likely to take the substantial financial risk. Age was also a determining factor of risk tolerance which follows the assumptions of the investor lifecycle where younger investors are more risk tolerant. The study furthermore found that higher annual income attracts more risk-taking while lower-income attracts more risk averseness in individuals. It was lastly observed that married individuals and those that are no longer married will be more likely to be risk-averse. This study makes a significant contribution in profiling investors risk tolerance according to their demographic factors whereby financial institutions can offer more tailored investment options.

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PENGARUH FAKTOR DEMOGRAFI, RISK TOLERANCE DAN OVERCONFIDENCE TERHADAP PENGAMBILAN KEPUTUSAN INVESTASI MAHASISWA DI KOTA PEKALONGAN

Jurnal Bisnis Terapan ◽

10.24123/jbt.v5i2.4688 ◽

2021 ◽

Vol 5 (2) ◽

pp. 203-216

Author(s):

Lathifatunnisa ◽

Asri Nur Wahyuni

Keyword(s):

Decision Making ◽

Investment Decision ◽

Linear Regression Analysis ◽

Demographic Factors ◽

Sampling Technique ◽

Multiple Linear Regression Analysis ◽

Risk Tolerance ◽

Investment Decision Making ◽

Analytical Tools ◽

Positive Effect

The purpose of this study was to obtain empirical evidence about the influence of demographic factors, risk tolerance and overconfidence on investment decision making with the object of research being students in Pekalongan City. This study uses quantitative data by taking a sample of 100 student respondents using purposive sampling technique. The distribution of questionnaires was chosen as the data collection method in this study. Multiple linear regression analysis, classical assumption test and hypothesis testing using SPSS 25 program were used as analytical tools in this study. The results of this study indicate that demographic factors, namely age, gender and monthly income have a positive but not significant effect on investment decision making, risk tolerance has a significant positive effect on investment decisions. On the other hand, overconfidence has a positive but not significant effect on investment decision making.

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Impact of Demographic Factors on Investment Risk Tolerance

International Journal of Business and Economic Affairs ◽

10.24088/ijbea-2021-62004 ◽

2021 ◽

Vol 6 (2) ◽

Keyword(s):

Demographic Factors ◽

Risk Tolerance ◽

Investment Risk

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Predicting a Model for the Financial Risk Tolerance of Retail Investors of Durgapur City on Their Demographic Factors Using Multiple Discriminant Analysis

Smart Intelligent Computing and Applications - Smart Innovation, Systems and Technologies ◽

10.1007/978-981-13-9282-5_65 ◽

2019 ◽

pp. 685-692

Author(s):

Amrita Bhattacharya ◽

Avijan Dutta

Keyword(s):

Discriminant Analysis ◽

Financial Risk ◽

Demographic Factors ◽

Risk Tolerance ◽

Multiple Discriminant Analysis ◽

Retail Investors ◽

Financial Risk Tolerance

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Impact of Risk Tolerance and Demographic Factors on Financial Investment Decision

GIS Business ◽

10.26643/gis.v13i5.3270 ◽

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.

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

Foundations of Management ◽

10.2478/fman-2018-0023 ◽

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.

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