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Modeling Financial Risk Attitude: The Role of Education And Financial Literacy

Author

Listed:
  • Iannario Maria

    (University of Naples Federico II, Department of Political Science, Italy)

  • Monti Anna Clara

    (University of Sannio, Department of Law and Economics, Italy)

  • Scalera Domenico

    (University of Sannio, Department of Law and Economics, Italy)

Abstract

This paper studies the relationship between risk propensity, education and financial literacy. The results of the empirical investigation confirm the importance of the key explanatory variables of education and financial competence. Since they are both included in the model, the different roles of each are singled out. In particular, while education turns out to be a factor contributing to raising risk tolerance, financial literacy tends to reduce risk propensity. Risk attitude is evaluated by self-reported assessment and modeled through cumulative logit models. In order to handle anomalous data, M estimators with a bounded influence function are considered.

Suggested Citation

  • Iannario Maria & Monti Anna Clara & Scalera Domenico, 2024. "Modeling Financial Risk Attitude: The Role of Education And Financial Literacy," Financial Internet Quarterly (formerly e-Finanse), Sciendo, vol. 20(2), pages 1-14.
    • Handle: RePEc:vrs:finiqu:v:20:y:2024:i:2:p:1-14:n:1001
    DOI: 10.2478/fiqf-2024-0008
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    More about this item

    Keywords

    Financial Literacy; Ordinal Response Models; Risk Attitude; Robust Estimation;
    All these keywords.

    JEL classification:

    • C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General
    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • G53 - Financial Economics - - Household Finance - - - Financial Literacy

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