INFLUENCE OF SOCIO-DEMOGRAPHIC CHARACTERISTICS, FINANCIAL LITERACY AND MOOD ON FINANCIAL RISK TOLERANCE

Ali Osman Oztop; Ezgi Kuyu

doi:10.17261/Pressacademia.2020.1297

Research Article

INFLUENCE OF SOCIO-DEMOGRAPHIC CHARACTERISTICS, FINANCIAL LITERACY AND MOOD ON FINANCIAL RISK TOLERANCE

Year 2020, , 209 - 222, 30.09.2020

Ali Osman Oztop , Ezgi Kuyu

https://doi.org/10.17261/Pressacademia.2020.1297

Abstract

The Purpose- Risk is an inherent element of any kind of financial investment instruments. The aim of this study is to determine the factors affecting financial risk tolerance of the individuals. Additionally, this study analyses the role of mood in the financial risk tolerance.
Data and Methodology- Data were collected using a survey questionnaire. 588 questionnaires were completed and used for analysis. This study employs an ordered logit model (OLM) to validate and assess proposed research model.
Results- According to the results of the study, there is a statistically positive and significant relationship between both positive emotional state and age and financial risk tolerance. On the other hand, there is no significant relationship between gender, income, having children, financial literacy and financial risk tolerance. The results of this study indicate that the moment of decision making is important because of risk tolerance of individuals is affected by positive emotional state as well as age.
Conclusion– This study shows that both financial knowledge and positive mood are strong determinants of financial risk tolerance. Surprisingly, there is no relation between gender, income level, having children, financial literacy level and the dependent variable financial risk tolerance level. Financial risk tolerance which shapes financial decision making process is influenced by the individual's biopsychosocial and environmental factors rather than rational choice theory.

Keywords

Financial literacy, behavioral finance, mood, financial risk tolerance, ordered logit model

References

Ackert, L. F., Church, B. K., & Deaves, R. (2003). Emotion and Financial Markets. Economic Review - Federal Reserve Bank of Atlanta, 88(2), 33–41. http://doi.org/10.1017/CBO9781107415324.004
Agarwal, S., Amromin, G., Ben-David, I., Chomsisengphet, S., & Evanoff, D. D. (2015). Financial literacy and financial planning: Evidence from India. Journal of Housing Economics, 27, 4–21. http://doi.org/10.1016/j.jhe.2015.02.003
Alpay, E. E., Yavuz, M., & Kahyaoğlu, M. B. (2015). Gelir Durumunun Risk Algısına Etki Eden Diğer Sosyo-Ekonomikve Demografik Faktörler Üzerindeki Etkisi. Cumhuriyet Üniversitesi İktisadi ve İdari Bilimler Dergisi, 16(1), 205–226.
Anbar, A., & Eker, M. (2009). Bireysel yatırımcıların finansal risk algılamalarını etkileyen demografik ve sosyoekonomik faktörler. ZKU Journal of Social Sciences, 5(9), 129–150.
Aren, S., & Zengin, A. N. (2016). Influence of Financial Literacy and Risk Perception on Choice of Investment. Procedia - Social and Behavioral Sciences, 235(February), 656–663. http://doi.org/10.1016/j.sbspro.2016.11.047
Arı, E.& Yıldız, Z. (2014). Parallel Lines Assumption in Ordinal Logistic Regression and Analysis Approaches, International Interdisciplinary Journal of Scientific Research, Vol. 1, No. 3 pp. 8-23.
Au, K., Chan, F., Wang, D., & Vertinsky, I. (2003). Mood in foreign exchange trading: Cognitive processes and performance. Organizational Behavior and Human Decision Processes, 91(2), 322–338. http://doi.org/10.1016/S0749-5978(02)00510-1
Awais, M., Laber, M. F., Rasheed, N., & Khursheed, A. (2016). Impact of Financial Literacy and Investment Experience on Risk Tolerance and Investment Decisions: Empirical Evidence from Pakistan. International Journal of Economics and Financial Issues, 6(1), 73–79.
Bashir, T., Azam, S. N., Butt, S. A. A., Javed, S. A., & Tanvir, S. A. (2013). Are Behavioral Biases Influenced By Demographic Characteristics & Personality Traits? Evidence From Pakistan. European Scientific Journal, 9(29), 277–293.
Brown, S., & Taylor, K. (2002). Wage Growth , Human Capital and Risk Preference : Evidence from the British Household Panel Survey. Retrieved April 9, 2018, from https://www.le.ac.uk/economics/research/RePEc/lec/leecon/econ02-14.pdf?uol_r=d307e306
Calcagno, R., & Monticone, C. (2015). Financial literacy and the demand for financial advice. Journal of Banking & Finance, 50, 363–380. http://doi.org/10.1016/j.jbankfin.2014.03.013
Ceyhan, G. (2008). Yaşam Biçimlerinin Finansal Risk Toleransına Olan Etkileri Üzerine Bir Uygulama (Basılmamış Yüksek Lisans Tezi). Hacettepe Üniversitesi Sosyal Bilimler Enstitüsü, Ankara.
Chaffai, M., & Medhioub, I. (2014). Behavioral finance: An empirical study of the Tunisian stock market. International Journal of Economics and Financial Issues, 4(3), 527–538.
Chavali, K., & Mohanraj, M. P. (2016). International Journal of Economics and Financial Issues Impact of Demographic Variables and Risk Tolerance on Investment Decisions: An Empirical Analysis. International Journal of Economics and Financial Issues, 6(1), 169–175.
Chen, C. K.&Hughes, J. (2004). Using Ordinal Regression Model to Analyze Student Satisfaction Questionnaires, Association for Institutional Research, Vol. 1, 2004, 1-13.
Cihangir, M., Şak, N., & Bilgin, Ş. (2016). Bireysel Yatırımcı Demografileri: Osmaniye İlinde Risk Getiri Tercihlerinin Multinominal Probit Modeliyle İncelenmesi. Muhasebe ve Finansman Dergisi, (70), 129–142. http://doi.org/10.25095/mufad.396684
Dalton, M. A., & Dalton, J. F. (2004). Personal Financial Planning: Theory and Practice. Kaplan Financial.
De Paola, M. (2013). The Determinants of Risk Aversion: The Role of Intergenerational Transmission. German Economic Review, 14(2), 214–234. http://doi.org/10.1111/j.1468-0475.2011.00561.x
Delis, M. D., Kammas, P., & Mylonidis, N. (2015). Trust , Happiness , and Households’ Financial Decisions.
Dohmen, T., Falk, A., Huffman, D., Sunde, U., Schupp, J., & Wagner, G. G. (2011). Individual Risk Attitudes: Measurement, Determinants, and Behavioral Consequences. Journal of the European Economic Association, 9(3), 522–550. http://doi.org/10.1111/j.1542-4774.2011.01015.x
Drichoutis, A. C., & Nayga, R. M. (2013). Eliciting risk and time preferences under induced mood states. Journal of Socio-Economics, 45, 18–27. http://doi.org/10.1016/j.socec.2013.04.008
Droms, W. G. (1987). Investment Asset Allocation for PFP Clients. Journal of Accountancy, 163(4), 114–118.
Embrey, L., & Fox, J. (1997). Gender differences in the investment decision-making process. Journal of Financial Counseling and Planning, 8(2), 33–40.
Faff, R., Hallahan, T., & McKenzie, M. (2009). Nonlinear linkages between financial risk tolerance and demographic characteristics. Applied Economics Letters, 16(13), 1329–1332. http://doi.org/10.1080/13504850701381123
Finke, M. S., & Huston, S. J. (2003). The Brighter Side of Financial Risk: Financial Risk Tolerance and Wealth. Journal of Family and Economic Issues, 24(3), 233–256. http://doi.org/10.1023/A:1025443204681
Finucane, M. L., Alhakami, A., Slovic, P., & Johnson, S. M. (2000). The affect heuristic in judgments of risks and benefits. Journal of Behavioral Decision Making, 13(1), 1–17. http://doi.org/10.1002/(SICI)1099-0771(200001/03)13:1<1::AID-BDM333>3.0.CO;2-S
Fisher, P. J., & Yao, R. (2017). Gender differences in financial risk tolerance. Journal of Economic Psychology, 61, 191–202. http://doi.org/10.1016/j.joep.2017.03.006
Fox, J. (2005). Logistic regression. Maximum-Likelihood Estimation and Generalized Models, York Summer Programme in Data Analysis.
Gibson, R., Michayluk, D., & Van de Venter, G. (2013). Financial risk tolerance: An analysis of unexplored factors. Financial Services Review, 22(1), 23–50.
Grable, J. E. (2000). Financial risk tolerance and additional factors that affect risk taking in everyday money matters. Journal of Business and Psychology, 14(4), 625–630. http://doi.org/10.1023/A:1022994314982
Grable, J. E., & Lytton, R. H. (1998). Investor Risk Tolerance: Testing the Efficacy of Demographics as Differentiating and Classifying Factors. Financial Counseling and Planning, 9(1), 61–73.
Grable, J. E., & Roszkowski, M. J. (2008). The influence of mood on the willingness to take financial risks. Journal of Risk Research, 11(7), 905–923. http://doi.org/10.1080/13669870802090390
Grable, J., & Joo, S. (2004). Environmental and biopsychosocial factors associated with financial risk tolerance. Journal of Financial Counseling and Planning, 15(1), 73–82.
Grable, J., & Lytton, R. (1999). Financial risk tolerance revisited: the development of a risk assessment instrument. Financial services review, 8(3), 163-181.
Grable J.E. (2016) Financial Risk Tolerance. In: Xiao J. (eds) Handbook of Consumer Finance Research. Springer, Cham. https://doi.org/10.1007/978-3-319-28887-1_2
Grilli, L., & Rampichini, C. (2014). Ordered logit model. In Encyclopedia of Quality of Life and Well-Being Research (pp. 4510-4513). Springer Netherlands.
Halek, M., & Eisenhauer, J. G. (2001). Demography of Risk Aversion. The Journal of Risk and Insurance, 68(1), 1. http://doi.org/10.2307/2678130
Hallahan, T. A., Faff, R. W., & McKenzie, M. D. (2004). An empirical investigation of personal financial risk tolerance. Financial Services Review-Greenwich-, 13(1), 57–78.
Hallahan, T., Faff, R., & McKenzie, M. (2003). An exploratory investigation of the relation between risk tolerance scores and demographic characteristics. Journal of Multinational Financial Management, 13(4–5), 483–502. http://doi.org/10.1016/S1042-444X(03)00022-7
Irandoust, M. (2017). Factors Associated With Financial Risk Tolerance Based on Proportional Odds Model: Evidence From Sweden. Journal of Financial Counseling and Planning, 28(1), 155–164. http://doi.org/10.1891/1052-3073.28.1.155
Irwin, C. E. (1993). Adolescence and risk taking: How are they related? In N. J. Bell & R. W. Bell (Eds.), Adolescent Risk Taking (pp. 7–28). Newbury Park, CA: Sage.
Jianakoplos, N. A., & Bernasek, A. (2006). Financial Risk Taking by Age and Birth Cohort. Southern Economic Journal, 72(4), 981. http://doi.org/10.2307/20111864
Johnson, E. J., & Tversky, A. (1983). Affect, generalization, and the perception of risk. Journal of Personality and Social Psychology, 45(1), 20–31. http://doi.org/10.1037/0022-3514.45.1.20
Jureviciene, D., & Jermakova, K. (2012). The Impact of Individuals’ Financial Behaviour on Investment Decisions. In Electronic International Interdisciplinary Conference (pp. 242–250).
Kahyaoğlu, M. B. (2011). Yatırım Kararlarına Etki Eden Çeşitli Duygusal ve Psikolojik Faktörlere Maruz Kalma Düzeyi Üzerinde Cinsiyetin Rolü: İMKB Bireysel Hisse Senedi Yatırımcıları Üzerine Bir Uygulama. Ekonomik ve Sosyal Araştırmalar Dergisi, 7(1), 29–51.
Kannadhasan, M., Aramvalarthan, S., Mitra, S. K., & Goyal, V. (2016). Relationship between Biopsychosocial Factors and Financial Risk Tolerance: An Empirical Study. Vikalpa, 41(2), 117–131. http://doi.org/10.1177/0256090916642685
Kliger, D., & Levy, O. (2003). Mood-induced variation in risk preferences, 52, 573–584. http://doi.org/10.1016/S0167-2681(03)00069-6
Korkmaz, T., & Ceylan, A. (2017). Sermaye Piyasası ve Menkul Değer Analizi (8. Baskı). Bursa: Ekin Kitabevi.
Kumar, M. D., Kambuaya, M., Jamil, F., & Muneer, S. (2015). Determinants of the Risk Tolerance of Individual Investors. International Journal of Economics and Financial Issues, 5(Special Issue), 373–378.
Kübilay, B., & Bayrakdaroglu, A. (2016). An Empirical Research on Investor Biases in Financial Decision-Making, Financial Risk Tolerance and Financial Personality. International Journal of Financial Research, 7(2), 171–182. http://doi.org/10.5430/ijfr.v7n2p171
Kübilay, B., & Bayrakdaroğlu, A. (2017). Finansta Psikososyal Boyut: Yatırım Psikolojisi ve SosyolojikFaktörler Açısından Bir İnceleme (1. Baskı). Ankara: Detay Yayıncılık.
Lerner, J. S., Han, S., & Keltner, D. (2007). Feelings and Consumer Decision Making: Extending the Appraisal-Tendency Framework. Journal of Consumer Psychology, 17(3), 181–187. http://doi.org/10.1016/S1057-7408(07)70027-X
Lerner, J. S., Small, D. A., & Loewenstein, G. (2004). Heart Strings and Purse Strings. Carryover Effects of Emotions on Economic Decisions. Psychological Science, 15(5), 337–341. http://doi.org/10.1111/j.0956-7976.2004.00679.x
Lin, H. (2012). How Herding Bias could be derived from Individual Investor Types and Risk Tolerance ? International Journal of Social, Behavioral, Educational, Economic, Business and Industrial Engineering, 6(6), 1395–1400.
Mandal, B., & Roe, B. E. (2014). Risk tolerance among national longitudinal survey of youth participants: The effects of age and cognitive skills. Economica, 81(323), 522–543. http://doi.org/10.1111/ecca.12088
Mandell, L., & Klein, L. S. (2009). The Impact of Financial Literacy Education on Subsequent Financial Behavior. Journal of Financial Counseling and Planning, 20(206), 15–24. http://doi.org/10.1.1.334.3320
Mertler, C. A., & Reinhart, R. V. (2016). Advanced and multivariate statistical methods: Practical application and interpretation. Routledge.
Mishra, M., & Mishra, S. (2016). Financial Risk Tolerance among Indian Investors: A Multiple Discriminant Modeling of Determinants. Strategic Change, 25(5), 485–500. http://doi.org/10.1002/jsc.2075
Moreschi, R. W. (2005). An Analysis Of The Ability Of Individuals To Predict Their Own Risk Tolerance. Journal of Business & Economics Research, 3(2), 39–48.
Murgea, A. (2010). Classical and Behavioural Finance in Investor Decision. Annals of University of Craiova - Economic Sciences Series, 2(38), 212–223.
Muzindutsi, P.-F., & Ramudzilu, P. M. (2016). Financial knowledge and subjective financial risk tolerance among students at a South African university. Risk Governance and Control: Financial Markets & Institutions, 5(3), 2015.
Muzindutsi, P.-F., & Ramudzuli, P. M. (2015). Financial knowledge and subjective financial risk tolerance among students at a South African university. Risk Governance and Control: Financial Markets & Institutions, 5(3), 180–185.
Nguyen, L., Gallery, G., & Newton, C. (2017). The joint influence of financial risk perception and risk tolerance on individual investment decision-making. Accounting & Finance. http://doi.org/10.1111/acfi.12295
Nguyen, Y., & Noussair, C. N. (2014). Risk Aversion and Emotions. Pacific Economic Review, 19(3), 296–312. http://doi.org/10.1111/1468-0106.12067
Olson, K. R. (2006). A Literature Review of Social Mood. The Journal of Behavioral Finance, 7(4), 193–203. http://doi.org/10.1207/s15427579jpfm0704
Paradi, J. C., Sherman, H. D., & Tam, F. K. (2018). Financial Services Beyond Banking: Risk Tolerance Measures for Portfolio Investors (pp. 313–325). http://doi.org/10.1007/978-3-319-69725-3_18
Pompian, M. M., & Longo, J. M. (2004). A New Paradigm for Practical Application of Behavioral Finance. The Journal of Wealth Management, 7(2), 9–15. http://doi.org/10.3905/jwm.2004.434561
Pranhakaran, K., & Karthika, P. (2011). A Study on Risk Perception and Portfolio Management of Equity Investors in Coimbatore City. Journal of Management and Science, 1(2), 1–13.
Roszkowski, M. J., & Grable, J. (2005). Gender Stereotypes in Advisors â€TM Clinical Judgments of Financial Risk Tolerance : Objects in the Mirror Are Closer than They Appear. Journal of Behavioral Finance, 6(4), 181–191. http://doi.org/10.1207/s15427579jpfm0604
Ryack, K. (2011). The impact of family relationships and financial education on financial risk tolerance. Financial Services Review, 20(3), 181–193.
Sachse, K., Jungermann, H., & Belting, J. M. (2012). Investment risk – The perspective of individual investors. Journal of Economic Psychology, 33(3), 437–447. http://doi.org/10.1016/j.joep.2011.12.006
Sefil, S., & Çilingiroğlu, H. (2011). Davranışsal Finansın Temelleri: Karar Vermenin Bilişsel Ve Duygusal Eğilimleri. İstanbul Ticaret Üniversitesi Sosyal Bilimler Dergisi, 10(19), 247–268.
Sulaiman, E. K. (2012). An Empirical Analysis of Financial Risk Tolerance and Demographic Features of Individual Investors. Procedia Economics and Finance, 2, 109–115. http://doi.org/10.1016/S2212-5671(12)00070-6
Sultana, S. T., & Pardhasaradhi, S. (2011). An Empirical Investigation of the Relation between Risk Tolerance and Socioeconomic Characteristics of Individual Investors. QUEST-Journal of Management and Research, 2(1), 57–66.
Sung, J., & Hanna, S. D. (1997). Factors Related to Risk Tolerance. SSRN Electronic Journal, 7. http://doi.org/10.2139/ssrn.2234
Tanyolac, C., & Karan, M. B. (2015). Analyzing Demographic Characteristics of the Security Investors: An Application to Turkey. Journal of Economics Finance and Accounting, 2(4). http://doi.org/10.17261/Pressacademia.2015414376
Thanki, H. (2015). Risk Tolerance Dependent on What ? Demographics or Personality Type : Findings from an Empirical Research. Journal of Marketing and Consumer Research, 6, 48–56.
Thomas, T. C., & Rajendran, G. (2012). BB & K Five-way Model and Investment Behavior of Individual Investors : Evidence from India. International Journal of Economics and Management, 6(1), 115–127.
Treffers, T., Koellinger, P. D., & Picot, A. O. (2012). In the Mood for Risk? An Experiment on Moods and Risk Preferences. ERIM Report Series Research in Management, (July).
Van Rooij, M. C., Lusardi, A., & Alessie, R. J. (2011). Financial literacy and retirement planning in the Netherlands. Journal of Economic Psychology, 32(4), 593-608.
Venter, G. V. (2006). Financial Planners’ Perceptions of Risk Tolerance. In The 2006 Financial Management Association’s (FMA) Annual Conference (pp. 1–31). Salt Lake City, Utah, USA.
Watson, D., Clark, L. A., & Tellegan, A. (1988). Development and validation of brief measures of positive and negative affect: The PANAS scales. Journal of Personality and Social Psychology, 54(6), 1063–1070.
Watson, J., & McNaughton, M. (2007). Gender Differences in Risk Aversion and Expected Retirement Benefits. Financial Analysts Journal, 63(4), 52–62. http://doi.org/10.2469/faj.v63.n4.4749
Wong, A. (2011). Financial Risk Tolerance and Selected Demographic Factors : A Comparative Study in 3 Countries. Global Journal of Finance and Banking Issues, 5(5), 1–13.
Yao, R., Gutter, M. S., & Hanna, S. D. (2005). The Financial Risk Tolerance of Blacks , Hispanics and Whites. Financial Counseling and Planning, 16(1), 51–62.
Yao, R., Sharpe, D. L., & Wang, F. (2011). Decomposing the age effect on risk tolerance. Journal of Socio-Economics, 40(6), 879-887

Year 2020, , 209 - 222, 30.09.2020

Ali Osman Oztop , Ezgi Kuyu

https://doi.org/10.17261/Pressacademia.2020.1297

Abstract

References

Ackert, L. F., Church, B. K., & Deaves, R. (2003). Emotion and Financial Markets. Economic Review - Federal Reserve Bank of Atlanta, 88(2), 33–41. http://doi.org/10.1017/CBO9781107415324.004
Agarwal, S., Amromin, G., Ben-David, I., Chomsisengphet, S., & Evanoff, D. D. (2015). Financial literacy and financial planning: Evidence from India. Journal of Housing Economics, 27, 4–21. http://doi.org/10.1016/j.jhe.2015.02.003
Alpay, E. E., Yavuz, M., & Kahyaoğlu, M. B. (2015). Gelir Durumunun Risk Algısına Etki Eden Diğer Sosyo-Ekonomikve Demografik Faktörler Üzerindeki Etkisi. Cumhuriyet Üniversitesi İktisadi ve İdari Bilimler Dergisi, 16(1), 205–226.
Anbar, A., & Eker, M. (2009). Bireysel yatırımcıların finansal risk algılamalarını etkileyen demografik ve sosyoekonomik faktörler. ZKU Journal of Social Sciences, 5(9), 129–150.
Aren, S., & Zengin, A. N. (2016). Influence of Financial Literacy and Risk Perception on Choice of Investment. Procedia - Social and Behavioral Sciences, 235(February), 656–663. http://doi.org/10.1016/j.sbspro.2016.11.047
Arı, E.& Yıldız, Z. (2014). Parallel Lines Assumption in Ordinal Logistic Regression and Analysis Approaches, International Interdisciplinary Journal of Scientific Research, Vol. 1, No. 3 pp. 8-23.
Au, K., Chan, F., Wang, D., & Vertinsky, I. (2003). Mood in foreign exchange trading: Cognitive processes and performance. Organizational Behavior and Human Decision Processes, 91(2), 322–338. http://doi.org/10.1016/S0749-5978(02)00510-1
Awais, M., Laber, M. F., Rasheed, N., & Khursheed, A. (2016). Impact of Financial Literacy and Investment Experience on Risk Tolerance and Investment Decisions: Empirical Evidence from Pakistan. International Journal of Economics and Financial Issues, 6(1), 73–79.
Bashir, T., Azam, S. N., Butt, S. A. A., Javed, S. A., & Tanvir, S. A. (2013). Are Behavioral Biases Influenced By Demographic Characteristics & Personality Traits? Evidence From Pakistan. European Scientific Journal, 9(29), 277–293.
Brown, S., & Taylor, K. (2002). Wage Growth , Human Capital and Risk Preference : Evidence from the British Household Panel Survey. Retrieved April 9, 2018, from https://www.le.ac.uk/economics/research/RePEc/lec/leecon/econ02-14.pdf?uol_r=d307e306
Calcagno, R., & Monticone, C. (2015). Financial literacy and the demand for financial advice. Journal of Banking & Finance, 50, 363–380. http://doi.org/10.1016/j.jbankfin.2014.03.013
Ceyhan, G. (2008). Yaşam Biçimlerinin Finansal Risk Toleransına Olan Etkileri Üzerine Bir Uygulama (Basılmamış Yüksek Lisans Tezi). Hacettepe Üniversitesi Sosyal Bilimler Enstitüsü, Ankara.
Chaffai, M., & Medhioub, I. (2014). Behavioral finance: An empirical study of the Tunisian stock market. International Journal of Economics and Financial Issues, 4(3), 527–538.
Chavali, K., & Mohanraj, M. P. (2016). International Journal of Economics and Financial Issues Impact of Demographic Variables and Risk Tolerance on Investment Decisions: An Empirical Analysis. International Journal of Economics and Financial Issues, 6(1), 169–175.
Chen, C. K.&Hughes, J. (2004). Using Ordinal Regression Model to Analyze Student Satisfaction Questionnaires, Association for Institutional Research, Vol. 1, 2004, 1-13.
Cihangir, M., Şak, N., & Bilgin, Ş. (2016). Bireysel Yatırımcı Demografileri: Osmaniye İlinde Risk Getiri Tercihlerinin Multinominal Probit Modeliyle İncelenmesi. Muhasebe ve Finansman Dergisi, (70), 129–142. http://doi.org/10.25095/mufad.396684
Dalton, M. A., & Dalton, J. F. (2004). Personal Financial Planning: Theory and Practice. Kaplan Financial.
De Paola, M. (2013). The Determinants of Risk Aversion: The Role of Intergenerational Transmission. German Economic Review, 14(2), 214–234. http://doi.org/10.1111/j.1468-0475.2011.00561.x
Delis, M. D., Kammas, P., & Mylonidis, N. (2015). Trust , Happiness , and Households’ Financial Decisions.
Dohmen, T., Falk, A., Huffman, D., Sunde, U., Schupp, J., & Wagner, G. G. (2011). Individual Risk Attitudes: Measurement, Determinants, and Behavioral Consequences. Journal of the European Economic Association, 9(3), 522–550. http://doi.org/10.1111/j.1542-4774.2011.01015.x
Drichoutis, A. C., & Nayga, R. M. (2013). Eliciting risk and time preferences under induced mood states. Journal of Socio-Economics, 45, 18–27. http://doi.org/10.1016/j.socec.2013.04.008
Droms, W. G. (1987). Investment Asset Allocation for PFP Clients. Journal of Accountancy, 163(4), 114–118.
Embrey, L., & Fox, J. (1997). Gender differences in the investment decision-making process. Journal of Financial Counseling and Planning, 8(2), 33–40.
Faff, R., Hallahan, T., & McKenzie, M. (2009). Nonlinear linkages between financial risk tolerance and demographic characteristics. Applied Economics Letters, 16(13), 1329–1332. http://doi.org/10.1080/13504850701381123
Finke, M. S., & Huston, S. J. (2003). The Brighter Side of Financial Risk: Financial Risk Tolerance and Wealth. Journal of Family and Economic Issues, 24(3), 233–256. http://doi.org/10.1023/A:1025443204681
Finucane, M. L., Alhakami, A., Slovic, P., & Johnson, S. M. (2000). The affect heuristic in judgments of risks and benefits. Journal of Behavioral Decision Making, 13(1), 1–17. http://doi.org/10.1002/(SICI)1099-0771(200001/03)13:1<1::AID-BDM333>3.0.CO;2-S
Fisher, P. J., & Yao, R. (2017). Gender differences in financial risk tolerance. Journal of Economic Psychology, 61, 191–202. http://doi.org/10.1016/j.joep.2017.03.006
Fox, J. (2005). Logistic regression. Maximum-Likelihood Estimation and Generalized Models, York Summer Programme in Data Analysis.
Gibson, R., Michayluk, D., & Van de Venter, G. (2013). Financial risk tolerance: An analysis of unexplored factors. Financial Services Review, 22(1), 23–50.
Grable, J. E. (2000). Financial risk tolerance and additional factors that affect risk taking in everyday money matters. Journal of Business and Psychology, 14(4), 625–630. http://doi.org/10.1023/A:1022994314982
Grable, J. E., & Lytton, R. H. (1998). Investor Risk Tolerance: Testing the Efficacy of Demographics as Differentiating and Classifying Factors. Financial Counseling and Planning, 9(1), 61–73.
Grable, J. E., & Roszkowski, M. J. (2008). The influence of mood on the willingness to take financial risks. Journal of Risk Research, 11(7), 905–923. http://doi.org/10.1080/13669870802090390
Grable, J., & Joo, S. (2004). Environmental and biopsychosocial factors associated with financial risk tolerance. Journal of Financial Counseling and Planning, 15(1), 73–82.
Grable, J., & Lytton, R. (1999). Financial risk tolerance revisited: the development of a risk assessment instrument. Financial services review, 8(3), 163-181.
Grable J.E. (2016) Financial Risk Tolerance. In: Xiao J. (eds) Handbook of Consumer Finance Research. Springer, Cham. https://doi.org/10.1007/978-3-319-28887-1_2
Grilli, L., & Rampichini, C. (2014). Ordered logit model. In Encyclopedia of Quality of Life and Well-Being Research (pp. 4510-4513). Springer Netherlands.
Halek, M., & Eisenhauer, J. G. (2001). Demography of Risk Aversion. The Journal of Risk and Insurance, 68(1), 1. http://doi.org/10.2307/2678130
Hallahan, T. A., Faff, R. W., & McKenzie, M. D. (2004). An empirical investigation of personal financial risk tolerance. Financial Services Review-Greenwich-, 13(1), 57–78.
Hallahan, T., Faff, R., & McKenzie, M. (2003). An exploratory investigation of the relation between risk tolerance scores and demographic characteristics. Journal of Multinational Financial Management, 13(4–5), 483–502. http://doi.org/10.1016/S1042-444X(03)00022-7
Irandoust, M. (2017). Factors Associated With Financial Risk Tolerance Based on Proportional Odds Model: Evidence From Sweden. Journal of Financial Counseling and Planning, 28(1), 155–164. http://doi.org/10.1891/1052-3073.28.1.155
Irwin, C. E. (1993). Adolescence and risk taking: How are they related? In N. J. Bell & R. W. Bell (Eds.), Adolescent Risk Taking (pp. 7–28). Newbury Park, CA: Sage.
Jianakoplos, N. A., & Bernasek, A. (2006). Financial Risk Taking by Age and Birth Cohort. Southern Economic Journal, 72(4), 981. http://doi.org/10.2307/20111864
Johnson, E. J., & Tversky, A. (1983). Affect, generalization, and the perception of risk. Journal of Personality and Social Psychology, 45(1), 20–31. http://doi.org/10.1037/0022-3514.45.1.20
Jureviciene, D., & Jermakova, K. (2012). The Impact of Individuals’ Financial Behaviour on Investment Decisions. In Electronic International Interdisciplinary Conference (pp. 242–250).
Kahyaoğlu, M. B. (2011). Yatırım Kararlarına Etki Eden Çeşitli Duygusal ve Psikolojik Faktörlere Maruz Kalma Düzeyi Üzerinde Cinsiyetin Rolü: İMKB Bireysel Hisse Senedi Yatırımcıları Üzerine Bir Uygulama. Ekonomik ve Sosyal Araştırmalar Dergisi, 7(1), 29–51.
Kannadhasan, M., Aramvalarthan, S., Mitra, S. K., & Goyal, V. (2016). Relationship between Biopsychosocial Factors and Financial Risk Tolerance: An Empirical Study. Vikalpa, 41(2), 117–131. http://doi.org/10.1177/0256090916642685
Kliger, D., & Levy, O. (2003). Mood-induced variation in risk preferences, 52, 573–584. http://doi.org/10.1016/S0167-2681(03)00069-6
Korkmaz, T., & Ceylan, A. (2017). Sermaye Piyasası ve Menkul Değer Analizi (8. Baskı). Bursa: Ekin Kitabevi.
Kumar, M. D., Kambuaya, M., Jamil, F., & Muneer, S. (2015). Determinants of the Risk Tolerance of Individual Investors. International Journal of Economics and Financial Issues, 5(Special Issue), 373–378.
Kübilay, B., & Bayrakdaroglu, A. (2016). An Empirical Research on Investor Biases in Financial Decision-Making, Financial Risk Tolerance and Financial Personality. International Journal of Financial Research, 7(2), 171–182. http://doi.org/10.5430/ijfr.v7n2p171
Kübilay, B., & Bayrakdaroğlu, A. (2017). Finansta Psikososyal Boyut: Yatırım Psikolojisi ve SosyolojikFaktörler Açısından Bir İnceleme (1. Baskı). Ankara: Detay Yayıncılık.
Lerner, J. S., Han, S., & Keltner, D. (2007). Feelings and Consumer Decision Making: Extending the Appraisal-Tendency Framework. Journal of Consumer Psychology, 17(3), 181–187. http://doi.org/10.1016/S1057-7408(07)70027-X
Lerner, J. S., Small, D. A., & Loewenstein, G. (2004). Heart Strings and Purse Strings. Carryover Effects of Emotions on Economic Decisions. Psychological Science, 15(5), 337–341. http://doi.org/10.1111/j.0956-7976.2004.00679.x
Lin, H. (2012). How Herding Bias could be derived from Individual Investor Types and Risk Tolerance ? International Journal of Social, Behavioral, Educational, Economic, Business and Industrial Engineering, 6(6), 1395–1400.
Mandal, B., & Roe, B. E. (2014). Risk tolerance among national longitudinal survey of youth participants: The effects of age and cognitive skills. Economica, 81(323), 522–543. http://doi.org/10.1111/ecca.12088
Mandell, L., & Klein, L. S. (2009). The Impact of Financial Literacy Education on Subsequent Financial Behavior. Journal of Financial Counseling and Planning, 20(206), 15–24. http://doi.org/10.1.1.334.3320
Mertler, C. A., & Reinhart, R. V. (2016). Advanced and multivariate statistical methods: Practical application and interpretation. Routledge.
Mishra, M., & Mishra, S. (2016). Financial Risk Tolerance among Indian Investors: A Multiple Discriminant Modeling of Determinants. Strategic Change, 25(5), 485–500. http://doi.org/10.1002/jsc.2075
Moreschi, R. W. (2005). An Analysis Of The Ability Of Individuals To Predict Their Own Risk Tolerance. Journal of Business & Economics Research, 3(2), 39–48.
Murgea, A. (2010). Classical and Behavioural Finance in Investor Decision. Annals of University of Craiova - Economic Sciences Series, 2(38), 212–223.
Muzindutsi, P.-F., & Ramudzilu, P. M. (2016). Financial knowledge and subjective financial risk tolerance among students at a South African university. Risk Governance and Control: Financial Markets & Institutions, 5(3), 2015.
Muzindutsi, P.-F., & Ramudzuli, P. M. (2015). Financial knowledge and subjective financial risk tolerance among students at a South African university. Risk Governance and Control: Financial Markets & Institutions, 5(3), 180–185.
Nguyen, L., Gallery, G., & Newton, C. (2017). The joint influence of financial risk perception and risk tolerance on individual investment decision-making. Accounting & Finance. http://doi.org/10.1111/acfi.12295
Nguyen, Y., & Noussair, C. N. (2014). Risk Aversion and Emotions. Pacific Economic Review, 19(3), 296–312. http://doi.org/10.1111/1468-0106.12067
Olson, K. R. (2006). A Literature Review of Social Mood. The Journal of Behavioral Finance, 7(4), 193–203. http://doi.org/10.1207/s15427579jpfm0704
Paradi, J. C., Sherman, H. D., & Tam, F. K. (2018). Financial Services Beyond Banking: Risk Tolerance Measures for Portfolio Investors (pp. 313–325). http://doi.org/10.1007/978-3-319-69725-3_18
Pompian, M. M., & Longo, J. M. (2004). A New Paradigm for Practical Application of Behavioral Finance. The Journal of Wealth Management, 7(2), 9–15. http://doi.org/10.3905/jwm.2004.434561
Pranhakaran, K., & Karthika, P. (2011). A Study on Risk Perception and Portfolio Management of Equity Investors in Coimbatore City. Journal of Management and Science, 1(2), 1–13.
Roszkowski, M. J., & Grable, J. (2005). Gender Stereotypes in Advisors â€TM Clinical Judgments of Financial Risk Tolerance : Objects in the Mirror Are Closer than They Appear. Journal of Behavioral Finance, 6(4), 181–191. http://doi.org/10.1207/s15427579jpfm0604
Ryack, K. (2011). The impact of family relationships and financial education on financial risk tolerance. Financial Services Review, 20(3), 181–193.
Sachse, K., Jungermann, H., & Belting, J. M. (2012). Investment risk – The perspective of individual investors. Journal of Economic Psychology, 33(3), 437–447. http://doi.org/10.1016/j.joep.2011.12.006
Sefil, S., & Çilingiroğlu, H. (2011). Davranışsal Finansın Temelleri: Karar Vermenin Bilişsel Ve Duygusal Eğilimleri. İstanbul Ticaret Üniversitesi Sosyal Bilimler Dergisi, 10(19), 247–268.
Sulaiman, E. K. (2012). An Empirical Analysis of Financial Risk Tolerance and Demographic Features of Individual Investors. Procedia Economics and Finance, 2, 109–115. http://doi.org/10.1016/S2212-5671(12)00070-6
Sultana, S. T., & Pardhasaradhi, S. (2011). An Empirical Investigation of the Relation between Risk Tolerance and Socioeconomic Characteristics of Individual Investors. QUEST-Journal of Management and Research, 2(1), 57–66.
Sung, J., & Hanna, S. D. (1997). Factors Related to Risk Tolerance. SSRN Electronic Journal, 7. http://doi.org/10.2139/ssrn.2234
Tanyolac, C., & Karan, M. B. (2015). Analyzing Demographic Characteristics of the Security Investors: An Application to Turkey. Journal of Economics Finance and Accounting, 2(4). http://doi.org/10.17261/Pressacademia.2015414376
Thanki, H. (2015). Risk Tolerance Dependent on What ? Demographics or Personality Type : Findings from an Empirical Research. Journal of Marketing and Consumer Research, 6, 48–56.
Thomas, T. C., & Rajendran, G. (2012). BB & K Five-way Model and Investment Behavior of Individual Investors : Evidence from India. International Journal of Economics and Management, 6(1), 115–127.
Treffers, T., Koellinger, P. D., & Picot, A. O. (2012). In the Mood for Risk? An Experiment on Moods and Risk Preferences. ERIM Report Series Research in Management, (July).
Van Rooij, M. C., Lusardi, A., & Alessie, R. J. (2011). Financial literacy and retirement planning in the Netherlands. Journal of Economic Psychology, 32(4), 593-608.
Venter, G. V. (2006). Financial Planners’ Perceptions of Risk Tolerance. In The 2006 Financial Management Association’s (FMA) Annual Conference (pp. 1–31). Salt Lake City, Utah, USA.
Watson, D., Clark, L. A., & Tellegan, A. (1988). Development and validation of brief measures of positive and negative affect: The PANAS scales. Journal of Personality and Social Psychology, 54(6), 1063–1070.
Watson, J., & McNaughton, M. (2007). Gender Differences in Risk Aversion and Expected Retirement Benefits. Financial Analysts Journal, 63(4), 52–62. http://doi.org/10.2469/faj.v63.n4.4749
Wong, A. (2011). Financial Risk Tolerance and Selected Demographic Factors : A Comparative Study in 3 Countries. Global Journal of Finance and Banking Issues, 5(5), 1–13.
Yao, R., Gutter, M. S., & Hanna, S. D. (2005). The Financial Risk Tolerance of Blacks , Hispanics and Whites. Financial Counseling and Planning, 16(1), 51–62.
Yao, R., Sharpe, D. L., & Wang, F. (2011). Decomposing the age effect on risk tolerance. Journal of Socio-Economics, 40(6), 879-887

There are 86 citations in total.

Details

Primary Language	English
Subjects	Finance, Business Administration
Journal Section	Articles
Authors	Ali Osman Oztop 0000-0002-7568-5927 Ezgi Kuyu This is me 0000-0001-7737-6389
Publication Date	September 30, 2020
Published in Issue	Year 2020

Cite

APA	Oztop, A. O., & Kuyu, E. (2020). INFLUENCE OF SOCIO-DEMOGRAPHIC CHARACTERISTICS, FINANCIAL LITERACY AND MOOD ON FINANCIAL RISK TOLERANCE. Journal of Business Economics and Finance, 9(3), 209-222. https://doi.org/10.17261/Pressacademia.2020.1297

Article Files

Full Text

Journal of Business, Economics and Finance (JBEF) is a scientific, academic, double blind peer-reviewed, quarterly and open-access journal. The publication language is English. The journal publishes four issues a year. The issuing months are March, June, September and December. The journal aims to provide a research source for all practitioners, policy makers and researchers working in the areas of business, economics and finance. The Editor of JBEF invites all manuscripts that that cover theoretical and/or applied researches on topics related to the interest areas of the Journal. JBEF charges no submission or publication fee.

Ethics Policy - JBEF applies the standards of Committee on Publication Ethics (COPE). JBEF is committed to the academic community ensuring ethics and quality of manuscripts in publications. Plagiarism is strictly forbidden and the manuscripts found to be plagiarized will not be accepted or if published will be removed from the publication. Authors must certify that their manuscripts are their original work. Plagiarism, duplicate, data fabrication and redundant publications are forbidden. The manuscripts are subject to plagiarism check by iThenticate or similar. All manuscript submissions must provide a similarity report (up to 15% excluding quotes, bibliography, abstract, method).

Open Access - All research articles published in PressAcademia Journals are fully open access; immediately freely available to read, download and share. Articles are published under the terms of a Creative Commons license which permits use, distribution and reproduction in any medium, provided the original work is properly cited. Open access is a property of individual works, not necessarily journals or publishers. Community standards, rather than copyright law, will continue to provide the mechanism for enforcement of proper attribution and responsible use of the published work, as they do now.