IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/40510.html
   My bibliography  Save this paper

Financial risk and its impact on new purchasing behavior in the online retail setting

Author

Listed:
  • Keating, Byron W.
  • Kriz, Anton
  • Quazi, Ali

Abstract

This paper examines the effect of financial risk on perceptions of service quality and relationship-marketing quality in the online retail environment. Perceptions of financial risk were found to be negatively associated with service quality. In particular, a well-designed and attractive Web site was found to mitigate perceptions of financial risk during early trial-buy purchasing. Relationship-marketing quality was not affected by financial risk. This study adds to an enhanced understanding of how risk perceptions influence assessment of service quality and relationship-marketing quality. While the drivers of service quality and relationship-marketing quality have been examined extensively in the online setting, a surprising lack of research investigates the role of risk perceptions in the early stage, buy-trial purchasing behavior. This emerging area of research interest is deserving of more attention. Our findings provide valuable normative guidance to researchers interested in the affects of perceived risk (particularly financial risk) on new online shoppers, emphasizing the interdependency between Web site design and risk perceptions.

Suggested Citation

  • Keating, Byron W. & Kriz, Anton & Quazi, Ali, 2008. "Financial risk and its impact on new purchasing behavior in the online retail setting," MPRA Paper 40510, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:40510
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/40510/1/MPRA_paper_40510.pdf
    File Function: original version
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Charles A. Holt & Susan K. Laury, 2005. "Risk Aversion and Incentive Effects: New Data without Order Effects," American Economic Review, American Economic Association, vol. 95(3), pages 902-912, June.
    2. Chaudhuri, Arjun, 1997. "Consumption Emotion and Perceived Risk: A Macro-Analytic Approach," Journal of Business Research, Elsevier, vol. 39(2), pages 81-92, June.
    3. Bonoma, Thomas V & Johnston, Wesley J, 1979. "Decision Making under Uncertainty: A Direct Measurement Approach," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 6(2), pages 177-191, Se.
    4. Dutta, Soumitra & Segev, Arie, 1999. "Business transformation on the Internet," European Management Journal, Elsevier, vol. 17(5), pages 466-476, October.
    5. Dowling, Grahame R & Staelin, Richard, 1994. "A Model of Perceived Risk and Intended Risk-Handling Activity," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 21(1), pages 119-134, June.
    6. Haliassos, Michael & Bertaut, Carol C, 1995. "Why Do So Few Hold Stocks?," Economic Journal, Royal Economic Society, vol. 105(432), pages 1110-1129, September.
    7. Jean-Noël Kapferer & Gilles Laurent, 1985. "Measuring consumer involvement profiles," Post-Print hal-00786781, HAL.
    8. B. Douglas Bernheim & Jonathan Skinner & Steven Weinberg, 2001. "What Accounts for the Variation in Retirement Wealth among U.S. Households?," American Economic Review, American Economic Association, vol. 91(4), pages 832-857, September.
    9. Forsythe, Sandra M. & Shi, Bo, 2003. "Consumer patronage and risk perceptions in Internet shopping," Journal of Business Research, Elsevier, vol. 56(11), pages 867-875, November.
    10. Robert B. Barsky & F. Thomas Juster & Miles S. Kimball & Matthew D. Shapiro, 1997. "Preference Parameters and Behavioral Heterogeneity: An Experimental Approach in the Health and Retirement Study," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 112(2), pages 537-579.
    11. Palsson, Anne-Marie, 1996. "Does the degree of relative risk aversion vary with household characteristics?," Journal of Economic Psychology, Elsevier, vol. 17(6), pages 771-787, December.
    12. Glenn W. Harrison & Eric Johnson & Melayne M. McInnes & E. Elisabet Rutström, 2005. "Risk Aversion and Incentive Effects: Comment," American Economic Review, American Economic Association, vol. 95(3), pages 897-901, June.
    13. Hauser, John R & Urban, Glen L, 1979. "Assessment of Attribute Importances and Consumer Utility Functions: von Neumann-Morgenstern Theory Applied to Consumer Behavior," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 5(4), pages 251-262, March.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Booij, Adam S. & van de Kuilen, Gijs, 2009. "A parameter-free analysis of the utility of money for the general population under prospect theory," Journal of Economic Psychology, Elsevier, vol. 30(4), pages 651-666, August.
    2. Maarten C.J. van Rooij & Annamaria Lusardi & Rob J.M. Alessie, 2012. "Financial Literacy, Retirement Planning and Household Wealth," Economic Journal, Royal Economic Society, vol. 122(560), pages 449-478, May.
    3. Sandip Chattopadhyay & Ranjan Dasgupta, 2015. "Demographic and Socioeconomic Impact on Risk Attitudes of the Indian Investors - An Empirical Study," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 5(4), pages 601-623.
    4. Oleg Badunenko & Nataliya Barasinska & Dorothea Schäfer, 2009. "Risk Attitudes and Investment Decisions across European Countries: Are Women More Conservative Investors than Men?," SOEPpapers on Multidisciplinary Panel Data Research 224, DIW Berlin, The German Socio-Economic Panel (SOEP).
    5. Arie Kapteyn & Constantijn Panis, 2003. "The Size and Composition of Wealth Holdings in the United States, Italy, and the Netherlands," NBER Working Papers 10182, National Bureau of Economic Research, Inc.
    6. Eriksen, Kristoffer W. & Kvaløy, Ola & Luzuriaga, Miguel, 2020. "Risk-taking on behalf of others," Journal of Behavioral and Experimental Finance, Elsevier, vol. 26(C).
    7. James Ang & Rebel Cole & Daniel Lawson, 2010. "The Role of Owner in Capital Structure Decisions: An Analysis of Single-Owner Corporations," Journal of Entrepreneurial Finance, Pepperdine University, Graziadio School of Business and Management, vol. 14(3), pages 1-36, Fall.
    8. Fred Schroyen & Karl Ove Aarbu, 2018. "Attitudes Towards Large Income Risk in Welfare States: An International Comparison," Economica, London School of Economics and Political Science, vol. 85(340), pages 846-872, October.
    9. repec:diw:diwfin:diwfin06010 is not listed on IDEAS
    10. Jayson S. Jia & Uzma Khan & Ab Litt, 2015. "The Effect of Self-Control on the Construction of Risk Perceptions," Management Science, INFORMS, vol. 61(9), pages 2259-2280, September.
    11. Annamaria Lusardi, 2003. "The Impact of Financial Education on Savings and Asset," Working Papers wp061, University of Michigan, Michigan Retirement Research Center.
    12. Sultan Saqar Oqaidan Alwahaibi, 2019. "Is Demographic Information Influence Risk Tolerance/Aversion in Investment Decision? Evidences from Literature Review," International Journal of Academic Research in Accounting, Finance and Management Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Accounting, Finance and Management Sciences, vol. 9(1), pages 111-122, January.
    13. Sandip Chattopadhyay & Ranjan Dasgupta, 2015. "Demographic and Socioeconomic Impact on Risk Attitudes of the Indian Investors - An Empirical Study," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 5(4), pages 601-623, April.
    14. Arie Kapteyn & Constantijn Panis, 2003. "The Size and Composition of Wealth Holdings in the United States, Italy, and the Netherlands," NBER Working Papers 10182, National Bureau of Economic Research, Inc.
    15. Katarzyna Kochaniak & Paweł Ulman, 2020. "Risk-Intolerant but Risk-Taking—Towards a Better Understanding of Inconsistent Survey Responses of the Euro Area Households," Sustainability, MDPI, vol. 12(17), pages 1-26, August.
    16. Andreas Hackethal & Michael Kirchler & Christine Laudenbach & Michael Razen & Annika Weber, 2023. "On the role of monetary incentives in risk preference elicitation experiments," Journal of Risk and Uncertainty, Springer, vol. 66(2), pages 189-213, April.
    17. Kvaløy, Ola & Eriksen, Kristoffer & Luzuriaga , Miguel, 2014. "Risk-taking with Other People’s Money," UiS Working Papers in Economics and Finance 2014/21, University of Stavanger.
    18. Cho, Jinsook & Lee, Jinkook, 2006. "An integrated model of risk and risk-reducing strategies," Journal of Business Research, Elsevier, vol. 59(1), pages 112-120, January.
    19. Galizzi, Matteo M. & Machado, Sara R. & Miniaci, Raffaele, 2016. "Temporal stability, cross-validity, and external validity of risk preferences measures: experimental evidence from a UK representative sample," LSE Research Online Documents on Economics 67554, London School of Economics and Political Science, LSE Library.
    20. Howard Kunreuther & Erwann Michel-Kerjan, 2015. "Demand for fixed-price multi-year contracts: Experimental evidence from insurance decisions," Journal of Risk and Uncertainty, Springer, vol. 51(2), pages 171-194, October.
    21. Kerri Brick & Martine Visser & Justine Burns, 2012. "Risk Aversion: Experimental Evidence from South African Fishing Communities," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 94(1), pages 133-152.

    More about this item

    Keywords

    financial risk; online; services;
    All these keywords.

    JEL classification:

    • G2 - Financial Economics - - Financial Institutions and Services
    • L8 - Industrial Organization - - Industry Studies: Services
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:40510. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Joachim Winter (email available below). General contact details of provider: https://edirc.repec.org/data/vfmunde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.