Abstract
Abstract: The purpose of this study is to explain difference in tolerance towards financial risk among entrepreneurs with different levels of financial literacy. Financial risk tolerance is the maximum amount of uncertainty an entrepreneur is willing to accept when making a financial decision. On the other hand, and according to the Organisation for Economic Co-operation and Development (OECD), financial literacy can be defined as a combination of awareness, knowledge, skill, attitude and behaviour necessary to make sound financial decisions and ultimately achieve individual financial wellbeing. Therefore, the aim of the study is to explain relationship between measured level of entrepreneurs’ financial literacy and their assessed tolerance towards financial risk. This is a quantitative study, where we use a questionnaire to asses tolerance towards financial risk and to measure the level of financial literacy. Also, we use non-probability sampling methods where participants are recruited by e-mail. To gain better understanding of relationship between entrepreneurs’ financial literacy and their assessed tolerance towards financial risk we use descriptive statistics, chi-square, correlation analysis and multiple regression analysis. The results of this study are expected to shed more light on understanding of relationship between entrepreneurs’ overall financial literacy and their tolerance towards financial risk. Implications of this study suggest that entrepreneurs’ tolerance towards financial risk may be driven more by their financial attitude and behaviour rather than their financial knowledge. Key words: measurement of financial literacy, measuring tolerance towards financial risk, entrepreneurs
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