You are here

Home » Content

AN EMPIRICAL INVESTIGATION FOR DETERMINING OF THE RELATION BETWEEN PERSONAL FINANCIAL RISK TOLERANCE AND DEMOGRAPHIC CHARACTERISTIC

Journal Name:

  • Ege Akademik Bakış Dergisi

Publication Year:

  • 2010

Key Words:

Author NameUniversity of AuthorFaculty of Author
Abstract (2. Language): 
Financial risk tolerance is one of the key elements that should be considered in making investment decisions for both investment managers and investors. According to its importance, understanding and measuring of financial risk tolerance is not a simple topic. Therefore measuring of financial risk tolerance and determining of the factors that affect financial risk perceptions of individual investors have been interest of research and discussion for long yerars. The purpose of this study was to investigate the relationship between financial risk tolerance and demographic characteristics such as age, gender, marital status, number of children, income and total net assets. In the analysis of data from nearly 1,100 university students, logistic regression analysis, and t-test and ANOVA analysis were used. Logistic regression analysis indicated that gender, department and working in a job were significant predictors of financial risk tolerance. Results of t-test and ANOVA analysis indicated that gender, department, working in a job, monthly personal income, monthly family’s total income and total net assets were significant in differentiating individuals into risk tolerance levels, although age, marital status and number of children had no significant effect on financial risk tolerance.
Bookmark/Search this post with
FULL TEXT (PDF): 
PDF icon arastirmax-empirical-investigation-determining-relation-between-personal-financial-risk-tolerance-and-demographic-characteristic.pdf
  • 2
503-522
  • English

REFERENCES

References: 

Al-Ajmi, J.Y. (2008): “Risk Tolerance of Individual Investors in an Emerging Market”, International Research Journal of Finance and Economics, 17, 15-26.
Ardehali, P.H., Paradi, J.C. and Asmild, M. (2005): “Assessing Financial Risk Tolerance of Portfolio Investors Using Data Envelopment Analysis”, International Journal of Information Technology & Decision Making, 4(3), 491–519.
Bajtelsmit, V.L. and Bernasek, A. (1996): “Why Do Women Invest Differently Than Men?”, Financial Counseling and Planning, 7, 1-10.
Bajtelsmit, V.L., Bernasek, A. and Jianakoplos, N.A. (1999): “Gender Differences in Defined Contribution Pension Decisions”, Financial Services Review, 8(1), 1-10.
Bailey, J.J. and Kinerson, C. (2005): “Regret Avoidance and Risk Tolerance”, Financial Counseling and Planning, 16(1), 23-28.
Bellante, D. and Gren, C.A., (2004): “Relative Risk Aversion among the Elderly”, Review of Financial Economics, 13, 269–281.
Bertaut, C.C. (1998): “Stockholding Behavior of U.S. Households: Evidence from the 1983-1989 Survey of Consumer Finances”, The Review of Economics and Statistics, MIT Press, 80(2), 263-275.
Brown, S. and Taylor, K. (2005): “Wage Growth, Human Capital and Financial Investment”, The Manchester School, 73(6), December, 686–708.
Callan, V.J. and Johnson, M. (1999): “Measuring Risk Tolerance: A Psychological Perspective”, The University of Queensland, August, 1-25.
Cesarini, D., Johannesson, M., Lichtenstein, P., Sandewall, O. and Wallace, B. (2008): “Is Financial Risk-Taking Behavior Genetically Transmitted?”, Research Institute of Industrial Economics, Working Paper Series, No.765.
Charness, G. and Gneezy, U. (2007): “Strong Evidence for Gender Differences in Investment”, September 18, 1-21,
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=648735, (Erişim Tarihi: 16.08.2008).
Chaulk, B., Johnson, P.J. and Bulcroft, R. (2003): ”Effects of Marriage and Children on Financial Risk Tolerance: A Synthesis of Family Development and Prospect Theory”, Journal of Family and Economic Issues, 24(3), Fall, 257-279.
Christiansen, C., Joensen, J.S. and Rangvid, J. (2006): “Gender, Marriage, and the Decision to Invest in Stocks and Bonds: Do Single Women Invest More in Less Risky Assets?”, November 29, http://papers.ssrn.com/sol3/papers.cfm?abstract_id=948164
Cohn, R.A., Lewellen, W.G., Lease, R.C. and Schlarbaum, G.G. (1975): “Individual Investor Risk Aversion and Investment Portfolio Composition”, The Journal of Finance, 30(2), 605-620.
Coleman, S. (2003): “Women and Risk: An Analysis of Attitudes and Investment Behavior”, Ed.: Janet L. Dye ve Denise Woodbury, Academy of Accounting and Financial Studies Journal, 7(2), 99-115.
Corter, J.E. and Chen, Y.J. (2006): “Do Investment Risk Tolerance Attitudes Predict Portfolio Risk?”, Journal of Business and Psychology, 20(3), Spring, 369-381.
Dohmen, T., Falk, A., Huffman, D., Sunde, U., Schupp, J. and Wagner, G.G. (2005): “Individual Risk Attitudes: New Evidence from a Large, Representative, Experimentally-Validated Survey”, IZA Discussion Paper, No. 1730, September.
Dwyer, P.D. Gilkeson, J.H. and List, J.A. (2002): “Gender Differences in Revealed Risk Taking: Evidence from Mutual Fund Investors”, Economics Letters, 76(2), July, 151-158.
Embrey, L.L. and Fox, J.J. (1997): “Gender Differences in the Investment Decision-Making Process”, Financial Counseling and Planning, 8(2), 33-40.
Faff, R. (2008): “On the Linkage between Financial Risk Tolerance and Risk Aversion”, The Journal of Financial Research, XXXI(1), Spring, 1-23.
Faff, R., Mulino, D. and Chai, D. (2008): “On the Linkage between Financial Risk Tolerance and Risk Aversion”, The Journal of Financial Research, 31(1), 1–23.
Fesler, P. and Schürz, M. (2008): “Stock Holdings in Austria”, Monetary Policy & the Economy, Q2/08, 83-100.
Filbeck, G., Hatfield, P. and Horvath, P. (2005): “Risk Aversion and Personality Type”, The Journal of Behavioral Finance, 6(4), 170–180.
Finke, M.S. and Huston, S.J. (2003): “The Brighter Side of Financial Risk: Financial Risk Tolerance and Wealth”, Journal of Family and Economic Issues, 24(3), Fall, 233-256.
Grable, J.E. and Lytton, R.H. (1998): “Investor Risk Tolerance: Testing the Efficacy of Demographics as Differentiating and Classifying Factors”, Financial Counseling and Planning, 9(1), 61-73.
Grable, J. and Lytton, R.H. (1999a): “Financial Risk Tolerance Revisited: The Development of a Risk Assessment Instrument”, Financial Services Review, 8, 163–181.
Grable, J.E. and Lytton, R.H. (1999b): “Assessing Financial Risk Tolerance: Do Demographic, Socioeconomic and Attitudinal Factors Work?”, Family Relations and Human Development /Family Economics and Resource Management Biennial, 1-9.
Grable, J.E. (2000): “Financial Risk Tolerance and Additional Factors that Affect Risk Taking in Everyday Money Matters”, Journal Of Business and Psychology, 14(4), 25-63.
Grable, J.E. and Joo, S.H. (2000): “A Cross-Disciplinary Examination of Financial Risk Tolerance”, Consumer Interests Annual, 46, 1-7.
Grable, J.E. and Lytton, R.H. (2001): “Assessing the Concurrent Validity of the SCF Risk Tolerance Question”, Financial Counseling and Planning, 12(2), 43-53.
Grable, J.E. and Joo, S.H. (2004): “Environmental and Biopsychosocial Factors Associated with Financial Risk Tolerance”, Financial Counseling and Planning, 15(1), 73-82.
Grable, J., Lytton, R.H., O'neill, B., Joo, S.H. and Klock, D. (2006): “Risk Tolerance, Projection Bias, Vividness and Equity Prices”, The Journal of Investing, Summer, 68-74.
Halek, M. and Eisenhauer, J.G. (2001): “Demography of Risk Aversion”, The Journal of Risk and Insurance, 68(1), 1-24.
Hallahan, T. Faff, R. and McKenzie, M. (2003): “An Exploratory Investigation of the Relation between Risk Tolerance Scores and Demographic Characteristics”, Journal of Multinational Financial Management, 13(4-5), December, 483-502.
Hallahan, T.A., Faff, R.W. and McKenzie, M.D. (2004): “An Empirical Investigation of Personal Financial Risk Tolerance”, Financial Services Review, 13, 57–78.
Hanna, S.D., Gutter, M.S. and Fan, J.X. (2001): “A Measure of Risk Tolerance Based On Economic Theory”, Financial Counseling and Planning, 12(2), 53-60.
Hanna, S.D. and Lindamood, S. (2004): “An Improved Measure of Risk Aversion”, Financial Counseling and Planning, 15(2), 27-38.
Harrison, G.W., Lau, M.I. and Rutström, E.E. (2005): “Estimating Risk Attitudes in Denmark: A Field Experiment”, Working Paper in Economics and Finance, No. 05/07, December.
Hawley, C.B. and Fujii, E.T. (1993-1994): “An Empirical Analysis of Preferences for Financial Risk: Further Evidence on The Friedman-Savage Model”, Journal of Post Keynesian Economics, 16(2), 197-204
Jianakoplos, N.A. and Bernasek, A. (1998): “Are Women More Risk Averse?”, Economic Inquiry, 36, October, 620-630.
Jianakoplos, N.A. and Bernasek, A. (2006): “Financial Risk Taking by Age and Birth Cohort”, Southern Economic Journal, 72(4), 981-1001.
Lugovskyy, O. and Grossman, P.J. (2007): “Forecasting the Risk Attitudes of Women and Men: An Experimental Test of the Strength of Gender Stereotypes”, Saint Cloud State University, Department of Economics, Working Papers, Number 2008-07, October.
Martenson, R. (2008): “Are Men Better Investors than Women? Gender Differences in Mutual Fund and Pension Investments”, Journal of Financial Services Marketing, 13, 72 – 81.
Masters, R. (1989): “Study Examines Investors’ Risk Taking Propensities”, Journal of Financial Planning, 2, July, 151-155.
Mayfield, C., Perdue, G. and Wooten, K. (2008): “Investment Management and Personality Type”, Financial Services Review, 17, 219–236.
Mittal, M. and Vyas, R.K. (2007): “Demographics and Investment Choice among Indian Investors”, The Icfai Journal of Behavioral Finance, IV, 52(4), 51-65.
Morin, R.A. and Suarez, A.F. (1983): “Risk Aversion Revisited”, The Journal of Finance, 38(4), 1201-1216.
Olsen, R.A. and Cox, C.M. (2001): “The Influence of Gender on the Perception and Response to Investment Risk: The Case of Professional Investors”, The Journal of Psychology and Financial Markets, 2(1), 29–36.
Qiu, J. (2002): “The Determinants of Households’ Direct and Indirect Stock Holding Behavior”, April.
Riley, N.F. and Russon, M.G. (1995): “Individual Asset Allocation and Indicators of Perceived Client Risk Tolerance”, Journal of Financial and Strategic Decisions, Volume 8(1), 65-70.
Roszkowski, M.J. and Grable, J. (2005a): “Gender Stereotypes in Advisors’ Clinical Judgments of Financial Risk Tolerance: Objects in the Mirror are Closer than They Appear”, The Journal of Behavioral Finance, 6(4), 181–191.
Roszkowski, M.J. and Grable, J. (2005b): “Estimating Risk Tolerance: The Degree of Accuracy and the Paramorphic Representations of the Estimate”, Financial Counseling and Planning, 16 (2), 29-47.
Roszkowski, M.J., Davey, G. and Grable, J.E. (2005): “Insights from Psychology and Psychometrics on Measuring Risk Tolerance”, Journal of Financial Planning, April, 66-77.
Schooley, D.K. and Worden, D.D. (1996): “Risk Aversion Measures: Comparing Attitudes and Asset Allocation”, Financial Services Review, 5(2), 87-99.
Sunden, A.E. and Surette, B.J. (1998): “Gender Differences in the Allocation of Assets in Retirement Savings Plans”, The American Economic Review, 88(2), 207-211.
Sung, J. and Hana, S. (1996): “Factors Related to Risk Tolerance”, Financial Counseling and Planning, 7, 11-20.
Venter, G.V. (2006): “Financial Planners’ Perceptions of Risk Tolerance”, The 2006 Financial Management Association’s (FMA) Annual Conference, Salt Lake City, Utah, USA, 11 – 14, October, 1-31.
Wang, C. and Hanna, S.D. (2007): “The Risk Tolerance and Stock Ownership of Business Owning Households”, Financial Counseling and Planning, 18(2), 3-18.
Wang, H. and Hanna, S. (1997): “Does Risk Tolerance Decrease with Age?”, Financial Counseling and Planning, 8(2), 27-31.
Watson, J. and McNaughton, M. (2007): “Gender Differences in Risk Aversion and Expected Retirement Benefits”, Financial Analysts Journal, 63(4), 52-62.
Yao, R. and Hanna, S.D. (2004): “The Effect of Gender and Marital Status on Financial Risk Tolerance”, Consumer Interests Annual, 50, 123-124.
Yao, R. and Hanna, S.D. (2005): “The Effect of Gender and Marital Status on Financial Risk Tolerance”, Journal of Personal Finance, 4 (1), 66-85.
Yao, R., Hanna, S.D. and Lindamood, S. (2004): “Changes in Financial Risk Tolerance, 1983-2001”, Financial Services Review, 13, 249-266.

Thank you for copying data from http://www.arastirmax.com