IDEAS home Printed from https://ideas.repec.org/a/wsi/qjfxxx/v13y2023i03ns2010139223500064.html
   My bibliography  Save this article

The Trust Risk Puzzle: The Impact of Trust on the Willingness to Take Financial Risk

Author

Listed:
  • Andreas Oehler

    (Chair of Finance, Bamberg University, Bamberg, Kaerntenstrasse 7, 96045 Bamberg, Germany)

  • Matthias Horn

    (Chair of Finance, Bamberg University, Bamberg, Kaerntenstrasse 7, 96045 Bamberg, Germany)

  • Stefan Wendt

    (Department of Business, Bifröst University, Bifröst, 311, Iceland)

Abstract

We provide a structural equation model to analyze the influence of both willingness to trust others and personality factors such as the Big Five characteristics and optimism on retail investors’ risky assets share and general willingness to take risks. The main findings are as follows: The personality trait agreeableness has a significant and positive impact on general willingness to trust. Willingness to trust others has a significant negative influence on the willingness to take financial risk. More neurotic and more conscientious individuals are significantly more risk averse. Furthermore, more optimistic people reveal a significant lower degree of risk aversion.

Suggested Citation

  • Andreas Oehler & Matthias Horn & Stefan Wendt, 2023. "The Trust Risk Puzzle: The Impact of Trust on the Willingness to Take Financial Risk," Quarterly Journal of Finance (QJF), World Scientific Publishing Co. Pte. Ltd., vol. 13(03), pages 1-32, September.
    • Handle: RePEc:wsi:qjfxxx:v:13:y:2023:i:03:n:s2010139223500064
    DOI: 10.1142/S2010139223500064
    as

    Download full text from publisher

    File URL: http://www.worldscientific.com/doi/abs/10.1142/S2010139223500064
    Download Restriction: Access to full text is restricted to subscribers
    File URL: https://libkey.io/10.1142/S2010139223500064?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    More about this item

    Keywords

    Trust; risk; investments; personality factors; optimism;
    All these keywords.

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G41 - Financial Economics - - Behavioral Finance - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making in Financial Markets
    • G51 - Financial Economics - - Household Finance - - - Household Savings, Borrowing, Debt, and Wealth

    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:wsi:qjfxxx:v:13:y:2023:i:03:n:s2010139223500064. 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.

    We have no bibliographic references for this item. You can help adding them by using 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: Tai Tone Lim (email available below). General contact details of provider: http://www.worldscinet.com/qjf/qjf.shtml .

    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.