IDEAS home Printed from https://ideas.repec.org/a/ege/journl/v10y2010i2p503-522.html
   My bibliography  Save this article

An Empirical Investigation for Determining of the Relation Between Personal Financial Risk Tolerance and Demographic Characteristic

Author

Listed:
  • Adem Anbar

    (Uludag University Faculty of Economics and Administrative Sciences, Departman of Business Administration, Accounting and Finance)

  • Melek Eker

    (Uludag University Faculty of Economics and Administrative Sciences, Departman of Business Administration, Accounting and Finance)

Abstract

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.

Suggested Citation

  • Adem Anbar & Melek Eker, 2010. "An Empirical Investigation for Determining of the Relation Between Personal Financial Risk Tolerance and Demographic Characteristic," Ege Academic Review, Ege University Faculty of Economics and Administrative Sciences, vol. 10(2), pages 503-522.
    • Handle: RePEc:ege:journl:v:10:y:2010:i:2:p:503-522
    as

    Download full text from publisher

    File URL: http://www.onlinedergi.com/MakaleDosyalari/51/PDF2010_2_4.pdf
    Download Restriction: no
    File URL: http://www.onlinedergi.com/eab/arsiv/arsivDetay.aspx?yil=2010&peryot=2
    File Function: Website of the journal issue
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Charness, Gary B & Gneezy, Uri, 2007. "Strong Evidence for Gender Differences in Investment," University of California at Santa Barbara, Economics Working Paper Series qt428481s8, Department of Economics, UC Santa Barbara.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Kumar Saurabh & Tanuj Nandan, 2019. "Role of financial knowledge, financial socialisation and financial risk attitude in financial satisfaction of Indian individuals," International Journal of Indian Culture and Business Management, Inderscience Enterprises Ltd, vol. 18(1), pages 104-122.
    2. Salem, Razan, 2019. "Examining the investment behavior of Arab women in the stock market," Journal of Behavioral and Experimental Finance, Elsevier, vol. 22(C), pages 151-160.
    3. Heena Thanki & Narayan Baser, 2019. "Interactive Impact of Demographic Variables and Personality Type on Risk Tolerance," Emerging Economy Studies, International Management Institute, vol. 5(1), pages 42-54, May.
    4. John Grable & Eun Jin Kwak & Martha Fulk & Aditi Routh, 2022. "A Simplified Measure of Investor Risk Aversion," Journal of Interdisciplinary Economics, , vol. 34(1), pages 7-34, January.
    5. 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.
    6. Beer, Francisca M. & Wellman, Joseph D., 2021. "Implication of stigmatization on investors financial risk tolerance: The case of gay men," Journal of Behavioral and Experimental Finance, Elsevier, vol. 31(C).
    7. Mahfuzur Rahman & Mohamed Albaity & Tarannum Azim Baigh & Md. Abdul Kaium Masud, 2023. "Determinants of Financial Risk Tolerance: An Analysis of Psychological Factors," JRFM, MDPI, vol. 16(2), pages 1-12, January.
    8. Brooks, Chris & Williams, Louis, 2021. "The impact of personality traits on attitude to financial risk," Research in International Business and Finance, Elsevier, vol. 58(C).
    9. John Grable & Dee Warmath & Eun Jin Kwak, 2022. "An Assessment of the Association between Political Orientation and Financial Risk Tolerance," JRFM, MDPI, vol. 15(5), pages 1-16, April.
    10. Yadav Devi Prasad Behera & Sudhansu Sekhar Nanda & Saroj Kumar Sahoo & Tushar Ranjan Sahoo, 2021. "The Compounding Effect of Investors’ Cognition and Risk Absorption Potential on Enhancing the Level of Interest towards Investment in the Domestic Capital Market," JRFM, MDPI, vol. 14(3), pages 1-18, February.
    11. Brooks, Chris & Sangiorgi, Ivan & Hillenbrand, Carola & Money, Kevin, 2019. "Experience wears the trousers: Exploring gender and attitude to financial risk," Journal of Economic Behavior & Organization, Elsevier, vol. 163(C), pages 483-515.
    12. Anbar, Adem & Eker, Melek, 2019. "The Effect of Sociodemographic Variables and Love of Money on Financial Risk Tolerance of Bankers," Business and Economics Research Journal, Uludag University, Faculty of Economics and Administrative Sciences, vol. 10(4), pages 855-866, July.
    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. Lin Li, 2023. "Investigating risk assessment in post-pandemic household cryptocurrency investments: an explainable machine learning approach," Journal of Asset Management, Palgrave Macmillan, vol. 24(4), pages 255-267, July.
    15. Antonios Evangelou & Sune Ferreira-Schenk & Lorainne Ferreira & Elizabeth Bothma, 2022. "Investment Risk Tolerance amongst South African University Students in the Vaal Triangle Area," International Journal of Economics and Financial Issues, Econjournals, vol. 12(1), pages 13-23.
    16. Heenkenda, Shirantha, 2014. "Determination of Financial Risk Tolerance among Different Household Sectors in Sri Lanka," MPRA Paper 67324, University Library of Munich, Germany.
    17. Ela Ostrovsky-Berman & Howard Litwin, 2019. "Social Network and Financial Risk Tolerance Among Investors Nearing and During Retirement," Journal of Family and Economic Issues, Springer, vol. 40(2), pages 237-249, June.
    18. Zhu, Alex Yue Feng, 2019. "Financial risk tolerance of Hong Kong adolescents: A hierarchical model," Children and Youth Services Review, Elsevier, vol. 102(C), pages 193-200.
    19. Brian Lucey & Charles Larkin, 2012. "Risk Tolerance and Demographic Characteristics: Preliminary Irish Evidence," The Institute for International Integration Studies Discussion Paper Series iiisdp406, IIIS.
    20. Heena Thanki & Sweety Shah & Vrajlal Sapovadia & Ankit D. Oza & Dumitru Doru Burduhos-Nergis, 2022. "Role of Gender in Predicting Determinant of Financial Risk Tolerance," Sustainability, MDPI, vol. 14(17), pages 1-13, August.
    21. Yılmaz Bayar & H. Funda Sezgin & Ömer Faruk Öztürk & Mahmut Ünsal Şaşmaz, 2020. "Financial Literacy and Financial Risk Tolerance of Individual Investors: Multinomial Logistic Regression Approach," SAGE Open, , vol. 10(3), pages 21582440209, July.

    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. Eriksen, Kristoffer W. & Kvaløy, Ola, 2014. "Myopic risk-taking in tournaments," Journal of Economic Behavior & Organization, Elsevier, vol. 97(C), pages 37-46.
    2. Jose Apesteguia & Ghazala Azmat & Nagore Iriberri, 2012. "The Impact of Gender Composition on Team Performance and Decision Making: Evidence from the Field," Management Science, INFORMS, vol. 58(1), pages 78-93, January.
    3. Kanagaretnam, Kiridaran & Mestelman, Stuart & Nainar, Khalid & Shehata, Mohamed, 2009. "The impact of social value orientation and risk attitudes on trust and reciprocity," Journal of Economic Psychology, Elsevier, vol. 30(3), pages 368-380, June.
    4. Thorsten Beck & Patrick Behr & Andre Guettler, 2013. "Gender and Banking: Are Women Better Loan Officers?," Review of Finance, European Finance Association, vol. 17(4), pages 1279-1321.
    5. Hopfensitz, Astrid, 2009. "Previous outcomes and reference dependence: A meta study of repeated investment tasks with and without restricted feedback," MPRA Paper 16096, University Library of Munich, Germany.
    6. Deck, Cary & Lee, Jungmin & Reyes, Javier A. & Rosen, Christopher C., 2013. "A failed attempt to explain within subject variation in risk taking behavior using domain specific risk attitudes," Journal of Economic Behavior & Organization, Elsevier, vol. 87(C), pages 1-24.
    7. Stéphane Robin & Kateřina Strážnická & Marie Claire Villeval, 2021. "Bubbles and incentives: an experiment on asset markets," Economic and Political Studies, Taylor & Francis Journals, vol. 9(1), pages 68-89, January.
    8. Ganga Bhavani & Khyati Shetty, 2017. "Impact of Demographics and Perceptions of Investors on Investment Avenues," Accounting and Finance Research, Sciedu Press, vol. 6(2), pages 198-198, May.
    9. Rigdon, Mary, 2009. "Trust and reciprocity in incentive contracting," Journal of Economic Behavior & Organization, Elsevier, vol. 70(1-2), pages 93-105, May.
    10. Gary Charness & Uri Gneezy, 2010. "Portfolio Choice And Risk Attitudes: An Experiment," Economic Inquiry, Western Economic Association International, vol. 48(1), pages 133-146, January.
    11. Wozniak, David, 2009. "Choices About Competition: Differences by gender and hormonal fluctuations, and the role of relative performance feedback," MPRA Paper 21097, University Library of Munich, Germany.
    12. Nabanita Datta Gupta & Anders Poulsen & Marie Claire Villeval, 2013. "Gender Matching And Competitiveness: Experimental Evidence," Economic Inquiry, Western Economic Association International, vol. 51(1), pages 816-835, January.
    13. W. Viscusi & Owen Phillips & Stephan Kroll, 2011. "Risky investment decisions: How are individuals influenced by their groups?," Journal of Risk and Uncertainty, Springer, vol. 43(2), pages 81-106, October.
    14. Hopfensitz, Astrid, 2009. "Previous Outcomes and Reference Dependence: A Meta Study of Repeated Investment Tasks with Restricted Feedback," TSE Working Papers 09-087, Toulouse School of Economics (TSE).
    15. Apesteguia, Jose & Funk, Patricia & Iriberri, Nagore, 2013. "Promoting rule compliance in daily-life: Evidence from a randomized field experiment in the public libraries of Barcelona," European Economic Review, Elsevier, vol. 64(C), pages 266-284.
    16. Booij, Adam S. & van Praag, Bernard M.S., 2009. "A simultaneous approach to the estimation of risk aversion and the subjective time discount rate," Journal of Economic Behavior & Organization, Elsevier, vol. 70(1-2), pages 374-388, May.
    17. Lucy F. Ackert & Ann B. Gillette & Jorge Martinez-Vazquez & Mark Rider, 2009. "Risk Tolerance, Self-Interest, and Social Preferences," Experimental Economics Center Working Paper Series 2009-04, Experimental Economics Center, Andrew Young School of Policy Studies, Georgia State University, revised Feb 2011.
    18. Lucy Ackert & Ann Gillette & Jorge Martinez-Vazquez & Mark Rider, 2011. "Are benevolent dictators altruistic in groups? A within-subject design," Experimental Economics, Springer;Economic Science Association, vol. 14(3), pages 307-321, September.
    19. Charness, Gary & Rustichini, Aldo, 2011. "Gender differences in cooperation with group membership," Games and Economic Behavior, Elsevier, vol. 72(1), pages 77-85, May.

    More about this item

    Keywords

    Financial Risk; Risk Aversion; Financial Risk Tolerance; Demographic Characterictics;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

    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:ege:journl:v:10:y:2010:i:2:p:503-522. 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: Baris Gök (email available below). General contact details of provider: https://edirc.repec.org/data/iiegetr.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.