Value-Based Financial Risk Prediction Model

Jiří Pospíšil,Ivana Olecká,Pavlína Jurníčková,Helena Pospíšilová,Nataša Matulayová,Pavla Macháčková

doi:10.3390/risks9110205

Abstract

The model of financial risk prediction we developed and present in our paper is based on the theoretical assumption that there exists a significant relationship between actual economic situation and values. This assumption confirmed by the research influences the potential risk in financial behaviour and it becomes actual especially in the case of changing life conditions. The concept of the model is based on data received from 3768 respondents questioned across the Czech Republic. Measured variables were indexed, and the cluster and factor analyses were used for multivariate analysis. The model is unique in the combination of personal values projected into six generalized value types and developed economic indexes clustered in four types of economic situations. The primary purpose of the model is to identify the anticipated personal financial risk of clients. The model has fundamental applications as a diagnostic or auto-diagnostic tool in social work, counselling, psychotherapy, and other helping professions, or as a research instrument leading to various hypotheses and to the enhancement of theories concerning economic behaviour.

Highlights

The value-based financial risk prediction model presented in this paper is based on a theoretical assumption that, out of all factors influencing human financial decisions, the most important are values and economic situations
We present the results of cluster and factor analysis, on the basis of which the model was built
Formula (6) and it is one of two crucial parts of the whole model calculation. This risk level multiplicated with the risk level of value type groups created the matrix of overall risk levels significant for the model

Summary

Introduction

The value-based financial risk prediction model presented in this paper is based on a theoretical assumption that, out of all factors influencing human financial decisions, the most important are values and economic situations. The power of the financial risk prediction model is in the combination of two key factors—values and economic situation, recognized in the introduction as two of the most important factors influencing financial decision-making. This model will enable helping professionals to: iations This led us to design the four components—financial responsibility (van Raaij 2016; Xiao et al 2014), financial well-being (Sirgy 2018; Strömbäck et al 2017), financial knowledge

Methods

Results

Discussion

Conclusion