Abstract
Financial risk tolerance is a complex process that goes beyond the exclusive use of demographic characteristics. Despite the necessity of developing a comprehensive financial risk tolerance measurement model, the psychological factors that might be important have been long overlooked. The purpose of this paper is to investigate the influence of psychological factors on financial risk tolerance level. The sample (n = 1204) comprises university students from different parts of Malaysia. Significant financial risk tolerance differences are found as a function of gender and race. Students with high financial risk tolerance (FRT) are found to be positively correlated with the propensity for regret, the propensity for trust, the propensity to attribute success to luck, the propensity for overconfidence, and the propensity for social interaction, but not with happiness in life. These findings highlight the importance of individual propensities in assessing the financial risk tolerance level of a person. This study will act as an aid to financial advisors in understanding the behavior and attitudes of their clients.
Published Version (
Free)
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
