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The influence of demograhic factors on risk tolerance for South African investors

Author

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  • Zandri Koekemoer

    (North West University)

Abstract

Financial risk tolerance, which is a known term in the financial world, indicates the amount of risk an investor is willing to tolerate when making investment decisions. Researchers indicate in previous studies that financial risk tolerance could be influenced by demographic factors such as gender, race, age, income and marital status. Hence, it is important to analyse the effect of demographic factors on financial risk tolerance, as it will ultimately affect investment decisions of South African investors. As a result, the aim of this study is to analyse the influence of demographic factors on South African investors? investment decisions. This study can be used as a forecasting tool for South African investment companies to predict risk tolerance levels based on the demographics of their client base. Results from this study indicate that male, African, young investors earning R700 000 and more and who have never been married are more risk tolerant and are willing to invest in high risk portfolios. The results from this study, in a South African context, were similar to previous non-South African studies.

Suggested Citation

  • Zandri Koekemoer, 2018. "The influence of demograhic factors on risk tolerance for South African investors," Proceedings of International Academic Conferences 6408640, International Institute of Social and Economic Sciences.
    • Handle: RePEc:sek:iacpro:6408640
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    File URL: https://iises.net/proceedings/39th-international-academic-conference-amsterdam/table-of-content/detail?cid=82&iid=024&rid=8640
    File Function: First version, 2018
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    Citations

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    Cited by:

    1. 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.
    2. Wookjae Heo & John E. Grable & Abed G. Rabbani, 2020. "A test of the association between the initial surge in COVID-19 cases and subsequent changes in financial risk tolerance," Review of Behavioral Finance, Emerald Group Publishing Limited, vol. 13(1), pages 3-19, August.

    More about this item

    Keywords

    Risk tolerance; investors; demographics; logistic binary regression; South Africa;
    All these keywords.

    JEL classification:

    • J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions

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