AN EMPIRICAL ANALYSIS OF FINANCIAL RISK TOLERANCE AND DEMOGRAPHIC FACTORS OF BUSINESS GRADUATES IN PAKISTAN

Risk tolerance is popularly used in the personal financial planning industry to understand an investor’s attitude towards risk. In the twenty-first century, it is very important for the various investment firms, fund managers, financial planners to understand financial investment decisions of an investor for developing a strategy for the sale of their investment products in market. However, financial decisions of an individual not only depend on financial risk-tolerance level, but also upon different demographic factors. Thus, this study is undertaken to develop a model that helps in understanding impact of risk tolerance and demographic factors jointly on investment decision, especially, a decision related to level of investment. Also, investor may be having higher risk tolerance for the calculative investment but may be having lover risk tolerance in speculative investment. So, based on extensive literature support, this research has tried to propose a model for understanding the impact of investment risk tolerance, capital risk tolerance, speculative risk tolerance, and six important demographic variables jointly on investment decision. Thus, this study would be helpful to investment firms in understanding impact of risk tolerances and demographic variables jointly on level of investment of investors, which can be used for designing a strategy or investment product to offer to the investors with different levels of financial risk tolerance and different demographic profiles.

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An Empirical Analysis of Financial Risk Tolerance and Demographic Features of Individual Investors

10.5176/2251-1997_af61 ◽

2012 ◽

Author(s):

Dr. Ebrahim Kunju Sulaiman

Keyword(s):

Empirical Analysis ◽

Financial Risk ◽

Risk Tolerance ◽

Individual Investors ◽

Financial Risk Tolerance ◽

Demographic Features

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Determinants of Financial and Non-Financial Risk Tolerance among Students at Selected South African Universities

Foundations of Management ◽

10.2478/fman-2018-0023 ◽

2018 ◽

Vol 10 (1) ◽

pp. 293-302

Author(s):

Pfano Michael Ramudzuli ◽

Paul-Francois Muzindutsi

Keyword(s):

South African ◽

Significant Influence ◽

Financial Risk ◽

Demographic Factors ◽

Binary Logistic Regression ◽

Risk Tolerance ◽

Financial Risks ◽

Allocation Process ◽

South African Universities ◽

Financial Risk Tolerance

Abstract To enhance the portfolio allocation process, individuals need to understand their financial ability and psychological willingness to tolerate risks. To do this, their risk tolerance level must be quantified. This study used a survey questionnaire to collect data from 470 students at selected South African universities, and a binary logistic regression to test the effect of demographic factors on financial risk tolerance versus non-financial risk tolerance. Our findings suggest that the level of risk tolerance cannot be generalized across different risk domains. We also found that demographic factors affect the two domains of risk tolerance differently. Specifically, age did not have a significant influence on financial risk tolerance, while it significantly increased non-financial risk tolerance. Similarly, gender did not have any significant influence on non-financial risk tolerance, while it positively affect-ed financial risk tolerance. Furthermore, students in the fields of the humanities, engineering and IT showed a strong appetite for non-financial risks, but students in the commerce faculty preferred financial risks.

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