Impact of Big-five Personality Traits on Investor's Risk Attitude

Abstract

The financial personality of an individual plays a crucial role in the investment decision-making process, considering the expected level of risk and return. This study investigated the impact of personality traits on the risk-taking attitude of potential investors in the Ludhiana district of Punjab, North India. Hence, the study adopted the descriptive research design with a snowball sampling technique. The study modified the big five personality traits instrument according to the need and a structured questionnaire administered to over fifty investors. Statistical techniques like descriptive statistics, KMO, and Bartlett test of Sphericity and Exploratory Factor Analysis were used to process the collected information. The findings revealed that extrovert personalities were more prone to high-risk investments, whereas conscientious investors avoid risky investments. This study also disclosed the significant relationship between personality traits and attitudes to risk. The study could be further extended to larger sample size and to other geographical areas to solicit the results effectively.