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Establishing a link between risk tolerance, investor personality and behavioural finance in South Africa

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  • Zandri Dickason
  • Sune Ferreira

Abstract

The main objective of this paper was to establish which behavioural finance biases are associated with a certain level of risk tolerance and investor personality. Furthermore, the study aimed to indicate how these behavioural finance biases can influence investment decisions. Since behavioural finance is becoming more essential in the investment industry, further research within a South African context was regarded as necessary. Results indicated that investors with a low-risk tolerance level and a conservative investor personality are subject towards loss aversion and mental accounting biases. Investors with a high-risk tolerance level are mostly subject towards the self-control bias. The significance of this study will enable investment companies to more accurately profile their investors and to offer more refined investment options.

Suggested Citation

  • Zandri Dickason & Sune Ferreira, 2018. "Establishing a link between risk tolerance, investor personality and behavioural finance in South Africa," Cogent Economics & Finance, Taylor & Francis Journals, vol. 6(1), pages 1519898-151, January.
    • Handle: RePEc:taf:oaefxx:v:6:y:2018:i:1:p:1519898
    DOI: 10.1080/23322039.2018.1519898
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    Cited by:

    1. Anzel Van den Bergh-Lindeque & Sune Ferreira-Schenk & Zandri Dickason-Koekemoer & Thomas Habanabakize, 2022. "What makes risk-averse investors tick? A practitioners guide," Cogent Economics & Finance, Taylor & Francis Journals, vol. 10(1), pages 2111786-211, December.
    2. 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.

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