RT Journal Article
SR Electronic
T1 Determinants of Financial Risk Tolerance (FRT): An Empirical Investigation
JF The Journal of Wealth Management
FD Institutional Investor Journals
SP jwm.2021.1.144
DO 10.3905/jwm.2021.1.144
A1 Heena Thanki
A1 Narayan Baser
YR 2021
UL https://pm-research.com/content/early/2021/06/02/jwm.2021.1.144.abstract
AB Investors’ capacity to accept risk when making a financial investment decision is popularly known as Financial Risk Tolerance (FRT). Financial advisors and managers are focused on understanding a client’s risk profile before giving any financial advice, and FRT is the most influential factor when investors choose among competing investment avenues. The current study analyzes the impact of various demographic factors, personality type, and financial literacy on the FRT of individual investors. We used a single cross-sectional descriptive research design, and collected data with the help of a structured questionnaire using a convenience sampling method. We found that personality type and financial literacy, along with gender, income, marital status, occupation, and number of dependents, significantly influenced the FRT of investors, while investors’ age and level of formal education were not significant in the determination of FRT.TOPICS: Wealth management, risk management, quantitative methods, statistical methodsKey Findings▪ Personality Type A positively correlated with Financial Risk Tolerance.▪ Financial literacy positively influenced Financial Risk Tolerance, while formal education played an insignificant role.▪ Gender, income, marital status, occupation, and number of dependents significantly influenced the Financial Risk Tolerance of investors.