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THE EFFECTS OF PERSONALITY TRAITS ON FINANCIAL BEHAVIOUR

Yıl 2019, Cilt: 8 Sayı: 3, 155 - 164, 30.09.2019

Gokhan Ozer Ummuhan Mutlu

https://doi.org/10.17261/Pressacademia.2019.1122

Öz

Purpose- The development of financial markets, the complexity of financial products and services, the differences in individual investor profile increase the importance of estimating the financial behaviour of individual investors. The aim of the study is to determine the effects of individual investor's personality traits on their financial behaviors.
Methodology- A questionnaire designed to evaluate the personality traits and financial behaviours of individual investors was used. The data set consisted of 1347 individual investors through survey method. We performed multiple linear regression to examine the hypothesized relationships.
Findings- According to the statistical results of the research, the dimensions of personality traits such as conscientiousness, agreeableness and openness to experience have positive and significant effects on financial behaviour. But extraversion and neuroticism have not significant effects on financial behaviour. Conclusion- The results of the study emphasize the importance of personality characteristics in explaining financial behaviours. Personality traits are important factors that financial institutions should focus on when offering products and services related to individual investor portfolios.

Anahtar Kelimeler

Behavioral finance financial behaviour personality traits financial risk tolerance financial literacy

Kaynakça

  • Alkaya, A. and Yagli, İ. (2015). Financial Literacy-Financial Information, Behaviour and Attitude: An Application on Nevşehir Hacı Bektaş Veli University İİBF Students. Journal of International Social Research, 8(40).
  • Allgood, S. and Walstad, W. (2011). The effects of perceived and actual financial knowledge on credit card behaviour. Networks Financial Institute Working Paper. Indiana State University.
  • Anbar, A. and Eker, M. (2010). ‘An Empirical Investigation for Determining of the Relationship Between Personal Financial Risk Tolerance and Demographic Characteristic’, Ege Academic Review. Vol. 10(2), 503-523.
  • Arifin, A. Z. (2017). The Influence of Financial Knowledge, Control and Income on Individual Financial Behaviour. European Research Studies, 20(3A), 635.
  • Asebedo, S. D. (2018). Personality and Financial Behaviour. Client Psychology, 137-153.
  • Asebedo, S. D., Wilmarth, M. J., Seay, M. C., Archuleta, K., Brase, G. L. and MacDonald, M. (2019). Personality and saving behavior among older adults. Journal of Consumer Affairs, 53(2), 488-519.
  • Bajtelsmit, V. L. and Bernasek, A. (1996). Why do women invest differently than men? Financial Counseling and Planning, 7, 1-10.
  • Bernheim, B. D., Garrett, D. M., and Maki, D. M. (2001). Education and saving:: The long-term effects of high school financial curriculum mandates. Journal of public Economics, 80(3), 435-465.
  • Costa FT Jr, McCrae RR, Dye DA. (1991). Facet scales for agreeableness and conscientiousness: A revision of the NEO Personality Inventory. Personality and Individual Differences, 12,887-898.
  • Costa, P. T. and McCrae, R. R. (1992). Revised NEO personalityinventory (NEO-PIR): Professional manual. Odessa, FL: Psychological Assessment Resources.
  • Davey, J. and George, C. (2011). Personality and Finance: The Effects of Personality on Financial Attitudes and Behaviour. International Journal of Interdisciplinary Social Sciences, 5(9).
  • Digman, J. M. (1990). Personality structure: Emergence of the five-factor model. Annual review of psychology, 41(1), 417-440.
  • Donnelly, G., Iyer, R. and Howell, R. T. (2012). The Big Five personality traits, material values, and financial well-being of self-described money managers. Journal of Economic Psychology, 33(6), 1129-1142.
  • Dwyer, P. D., Gilkeson, J. H. and List, J. A. (2002). Gender differences in revealed risk taking: evidence from mutual fund investors. Economics Letters, 76, 151-158. http://dx.doi.org/10.1016/S0165-1765(02)00045-9
  • Erkus, A. and Tabak, A. (2009). Effects of Five Factor Personality Traits on Conflict Management Styles of Employees: Research in Industry. Ataturk University Journal of Economics & Administrative Sciences, 23(2).
  • Goldberg, L. R. (1990). An alternative" description of personality": the big-five factor structure. Journal of personality and social psychology, 59(6), 1216.
  • Gong, B. and Yang, C. (2012). Gender differences in risk attitude: Field experiments on the matrilineal mosuo and the patriarchal yi. Journal of Economic Behavior & Organization, 83, 59-65. http://dx.doi.org/10.1016/j.jebo.2011.06.010
  • Grable, J. E. and Joo, S. (2004). Environmental and biopsychosocial factors associated with financial risk tolerance. Financial Counseling and Planning, 15(1), 73-82.
  • Grable, J. E. and Lytton, R. H. (1998). Investor risk tolerance: Testing the efficacy of demographics as differentiating and classifying factors. Financial Counseling and Planning, 9(1), 61-74.
  • Grable, J. E. and Joo, S. H. (2000). A cross-disciplinary examination of financial risk tolerance. Consumer Interests Annual, 46, 151-157.
  • Hallahan, T. A., Faff, R. W. and McKenzie, M. D. (2004). An empirical investigation of personal financial risk tolerance. Financial Services Review, 13, 57-78. Heo, W.,Nobre, L. H. N., Grable, J. E. and Ruiz-Menjivar, J. (2016). What Role Does Financial Risk Tolerance Play in Mediating Investing Behaviour? Journal of Financial Service Professionals, 70(5), 42-52.
  • Hershey, Douglas A. and Mowen, John C.. (2000). Psychological Determinants of Financial Preparedness for Retirement. The Gerontologist, 40 ( 6): 687– 697.
  • Hilgert, M. A.,Hogarth, J. M., and Beverly, S. G. (2003). Household financial management: The connection between knowledge and behaviour. Fed. Res. Bull.,89, 309.
  • Ibrahim, M. E. and Alqaydi, F. R. (2013). Financial literacy, personal financial attitude, and forms of personal debt among residents of the UAE. International Journal of Economics and Finance, 5(7), 126.
  • Jamshidinavid, B., Chavoshani, M., and Amiri, S. (2012). The impact of demographic and psychological characteristics on the investment prejudices in Tehran stock. European Journal of Business and Social Sciences, 1(5), 41-53.
  • Jianakoplos, N. A., and Bernasek, A. (2006). Financial risk taking by age, and birth cohort. Southern Economic Journal, 72(4), 981-1001. http://dx.doi.org/10.2307/20111864
  • Judge, T. A., Higgins, C. A., Thoresen, C. J. and Barrick, M. R. (1999). The big five personality traits, general mentalability, and career success across the life span. Personnel psychology, 52(3), 621-652.
  • Kotlikoff, L. and Bernheim, B. (2001). Household financial planning and financial literacy in Essays on saving, bequests, altruism, and life-cycle planning.
  • Kowert, P. A. and Hermann, M. G. (1997). Who takes risks? Daring and caution in foreign policy making. Journal of conflict Resolution, 41(5), 611-637.
  • Kubilay, B. and 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.
  • Lan, Q., Xiong, Q., He, L. and Ma, C. (2018). Individual investment decision behaviors based on demographic characteristics: Case from China. PloS one, 13(8), e0201916.
  • Larkin, C., Lucey, B. M. and Mulholland, M. (2013). Risk tolerance and demographic characteristics: Preliminary Irish evidence. Financial Services Review, 22, 77-91.
  • Lusardi, A. (2008). Household saving behaviour: The role of financial literacy, information, and financial education programs (No. w13824). National Bureau of Economic Research.
  • Mayfield, C., Perdue, G. and Wooten, K. (2008). Investment management and personality type. Financial Services Review, 17(3), 219-236.
  • McCrae, R. R. and John, O. P. (1992). An introduction to the five‐factor model and its applications. Journal of personality, 60(2), 175-215.
  • McCrae, R. R. and Costa, P. T. (1997). Conceptions and correlates of openness to experience. In Handbook of personality psychology. London: AcademicPress.
  • Nga, J. K. and Ken Yien, L. (2013). The influence of personality trait and demographics on financial decision making among Generation Y. Young Consumers, 14(3), 230-243.
  • Oehler, A.,Wendt, S., Wedlich, F. and Horn, M. (2018). Investors' personality influences investment decisions: Experimental evidence on extraversion and neuroticism. Journal of Behavioural Finance, 19(1), 30-48.
  • Pak, O. and Mahmood, M. (2015). Impact of personality on risk tolerance and investment decisions: A study on potential investors of Kazakhstan. International Journal of Commerce and Management, 25(4), 370-384.
  • Perry, V. G. and Morris, M. D. (2005). Who is in control? The role of self‐perception, knowledge, and income in explaining consumer financial behaviour. Journal of Consumer Affairs, 39(2), 299-313.
  • Pinjisakikool, T. (2018). TheInfluence of Personality Traits on Households’ Financial Risk Tolerance and Financial Behaviour. Journal of Interdisciplinary Economics, 30(1), 32-54.
  • Potrich, A. C. G.,Vieira, K. M. and Mendes-Da-Silva, W. (2016). Development of a financial literacy model for university students. Management Research Review, 39(3), 356-376.
  • Powell, M. and Ansic, D. (1997). Gender differences in risk behaviour in financial decision-making: An experimental analysis. Journal of Economic Psychology, 18, 605-628. http://dx.doi.org/10.1016/S0167-4870(97)00026-3
  • Raheja, S. and Dhiman, B. Does Investor Personality Determine their Risk Tolerance?
  • Roszkowski, M. J. and Grable, J. E. (2005). Estimating risk tolerance: The degree of accuracy and the paramorphic representations of the estimate. Financial Counseling and Planning, 16(2), 29-47.
  • Soane, E., Dewberry, C. and Narendran, S. (2010). The role of perceived costs and perceived benefits in the relationship between personality and risk‐related choices. Journal of Risk Research, 13(3), 303-318.
  • Tauni, M. Z.,Rao, Z. U. R., Fang, H., Mirza, S. S., Memon, Z. A. and Jebran, K. (2017). Do investor’s Big Five personality traits influence the association between information acquisition and stock trading behaviour?.China Finance Review International, 7(4), 450-477.
  • Unal, S. and Duger, Y. S. (2015). An empirical study of the relationship between the financial trait of academic staff and the trend of financial behaviour.
  • Wang, H. and S. Hanna, 1997. “Does Risk Tolerance Decrease with Age? Financial Counseling and Planning 8(2), pp. 27–32.
  • Watson, D. and Clark, L. A. (1997). Extraversion and its positive emotional core. In Handbook of personality psychology (pp. 767-793).
  • Zaidi, F. B. and Tauni, M. Z. (2012). Influence of investor’s personality traits and demographics on overconfidence bias. Institute of Interdisciplinary Business Research, 4(6), 730-746.
  • Zhao, H. and Seibert, S. E. (2006). The big five personality dimensions and entrepreneurial status: A meta-analyticalreview. Journal of Applied Psychology, 91(2), 259–271.

Yıl 2019, Cilt: 8 Sayı: 3, 155 - 164, 30.09.2019

Gokhan Ozer Ummuhan Mutlu

https://doi.org/10.17261/Pressacademia.2019.1122

Öz

Kaynakça

  • Alkaya, A. and Yagli, İ. (2015). Financial Literacy-Financial Information, Behaviour and Attitude: An Application on Nevşehir Hacı Bektaş Veli University İİBF Students. Journal of International Social Research, 8(40).
  • Allgood, S. and Walstad, W. (2011). The effects of perceived and actual financial knowledge on credit card behaviour. Networks Financial Institute Working Paper. Indiana State University.
  • Anbar, A. and Eker, M. (2010). ‘An Empirical Investigation for Determining of the Relationship Between Personal Financial Risk Tolerance and Demographic Characteristic’, Ege Academic Review. Vol. 10(2), 503-523.
  • Arifin, A. Z. (2017). The Influence of Financial Knowledge, Control and Income on Individual Financial Behaviour. European Research Studies, 20(3A), 635.
  • Asebedo, S. D. (2018). Personality and Financial Behaviour. Client Psychology, 137-153.
  • Asebedo, S. D., Wilmarth, M. J., Seay, M. C., Archuleta, K., Brase, G. L. and MacDonald, M. (2019). Personality and saving behavior among older adults. Journal of Consumer Affairs, 53(2), 488-519.
  • Bajtelsmit, V. L. and Bernasek, A. (1996). Why do women invest differently than men? Financial Counseling and Planning, 7, 1-10.
  • Bernheim, B. D., Garrett, D. M., and Maki, D. M. (2001). Education and saving:: The long-term effects of high school financial curriculum mandates. Journal of public Economics, 80(3), 435-465.
  • Costa FT Jr, McCrae RR, Dye DA. (1991). Facet scales for agreeableness and conscientiousness: A revision of the NEO Personality Inventory. Personality and Individual Differences, 12,887-898.
  • Costa, P. T. and McCrae, R. R. (1992). Revised NEO personalityinventory (NEO-PIR): Professional manual. Odessa, FL: Psychological Assessment Resources.
  • Davey, J. and George, C. (2011). Personality and Finance: The Effects of Personality on Financial Attitudes and Behaviour. International Journal of Interdisciplinary Social Sciences, 5(9).
  • Digman, J. M. (1990). Personality structure: Emergence of the five-factor model. Annual review of psychology, 41(1), 417-440.
  • Donnelly, G., Iyer, R. and Howell, R. T. (2012). The Big Five personality traits, material values, and financial well-being of self-described money managers. Journal of Economic Psychology, 33(6), 1129-1142.
  • Dwyer, P. D., Gilkeson, J. H. and List, J. A. (2002). Gender differences in revealed risk taking: evidence from mutual fund investors. Economics Letters, 76, 151-158. http://dx.doi.org/10.1016/S0165-1765(02)00045-9
  • Erkus, A. and Tabak, A. (2009). Effects of Five Factor Personality Traits on Conflict Management Styles of Employees: Research in Industry. Ataturk University Journal of Economics & Administrative Sciences, 23(2).
  • Goldberg, L. R. (1990). An alternative" description of personality": the big-five factor structure. Journal of personality and social psychology, 59(6), 1216.
  • Gong, B. and Yang, C. (2012). Gender differences in risk attitude: Field experiments on the matrilineal mosuo and the patriarchal yi. Journal of Economic Behavior & Organization, 83, 59-65. http://dx.doi.org/10.1016/j.jebo.2011.06.010
  • Grable, J. E. and Joo, S. (2004). Environmental and biopsychosocial factors associated with financial risk tolerance. Financial Counseling and Planning, 15(1), 73-82.
  • Grable, J. E. and Lytton, R. H. (1998). Investor risk tolerance: Testing the efficacy of demographics as differentiating and classifying factors. Financial Counseling and Planning, 9(1), 61-74.
  • Grable, J. E. and Joo, S. H. (2000). A cross-disciplinary examination of financial risk tolerance. Consumer Interests Annual, 46, 151-157.
  • Hallahan, T. A., Faff, R. W. and McKenzie, M. D. (2004). An empirical investigation of personal financial risk tolerance. Financial Services Review, 13, 57-78. Heo, W.,Nobre, L. H. N., Grable, J. E. and Ruiz-Menjivar, J. (2016). What Role Does Financial Risk Tolerance Play in Mediating Investing Behaviour? Journal of Financial Service Professionals, 70(5), 42-52.
  • Hershey, Douglas A. and Mowen, John C.. (2000). Psychological Determinants of Financial Preparedness for Retirement. The Gerontologist, 40 ( 6): 687– 697.
  • Hilgert, M. A.,Hogarth, J. M., and Beverly, S. G. (2003). Household financial management: The connection between knowledge and behaviour. Fed. Res. Bull.,89, 309.
  • Ibrahim, M. E. and Alqaydi, F. R. (2013). Financial literacy, personal financial attitude, and forms of personal debt among residents of the UAE. International Journal of Economics and Finance, 5(7), 126.
  • Jamshidinavid, B., Chavoshani, M., and Amiri, S. (2012). The impact of demographic and psychological characteristics on the investment prejudices in Tehran stock. European Journal of Business and Social Sciences, 1(5), 41-53.
  • Jianakoplos, N. A., and Bernasek, A. (2006). Financial risk taking by age, and birth cohort. Southern Economic Journal, 72(4), 981-1001. http://dx.doi.org/10.2307/20111864
  • Judge, T. A., Higgins, C. A., Thoresen, C. J. and Barrick, M. R. (1999). The big five personality traits, general mentalability, and career success across the life span. Personnel psychology, 52(3), 621-652.
  • Kotlikoff, L. and Bernheim, B. (2001). Household financial planning and financial literacy in Essays on saving, bequests, altruism, and life-cycle planning.
  • Kowert, P. A. and Hermann, M. G. (1997). Who takes risks? Daring and caution in foreign policy making. Journal of conflict Resolution, 41(5), 611-637.
  • Kubilay, B. and 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.
  • Lan, Q., Xiong, Q., He, L. and Ma, C. (2018). Individual investment decision behaviors based on demographic characteristics: Case from China. PloS one, 13(8), e0201916.
  • Larkin, C., Lucey, B. M. and Mulholland, M. (2013). Risk tolerance and demographic characteristics: Preliminary Irish evidence. Financial Services Review, 22, 77-91.
  • Lusardi, A. (2008). Household saving behaviour: The role of financial literacy, information, and financial education programs (No. w13824). National Bureau of Economic Research.
  • Mayfield, C., Perdue, G. and Wooten, K. (2008). Investment management and personality type. Financial Services Review, 17(3), 219-236.
  • McCrae, R. R. and John, O. P. (1992). An introduction to the five‐factor model and its applications. Journal of personality, 60(2), 175-215.
  • McCrae, R. R. and Costa, P. T. (1997). Conceptions and correlates of openness to experience. In Handbook of personality psychology. London: AcademicPress.
  • Nga, J. K. and Ken Yien, L. (2013). The influence of personality trait and demographics on financial decision making among Generation Y. Young Consumers, 14(3), 230-243.
  • Oehler, A.,Wendt, S., Wedlich, F. and Horn, M. (2018). Investors' personality influences investment decisions: Experimental evidence on extraversion and neuroticism. Journal of Behavioural Finance, 19(1), 30-48.
  • Pak, O. and Mahmood, M. (2015). Impact of personality on risk tolerance and investment decisions: A study on potential investors of Kazakhstan. International Journal of Commerce and Management, 25(4), 370-384.
  • Perry, V. G. and Morris, M. D. (2005). Who is in control? The role of self‐perception, knowledge, and income in explaining consumer financial behaviour. Journal of Consumer Affairs, 39(2), 299-313.
  • Pinjisakikool, T. (2018). TheInfluence of Personality Traits on Households’ Financial Risk Tolerance and Financial Behaviour. Journal of Interdisciplinary Economics, 30(1), 32-54.
  • Potrich, A. C. G.,Vieira, K. M. and Mendes-Da-Silva, W. (2016). Development of a financial literacy model for university students. Management Research Review, 39(3), 356-376.
  • Powell, M. and Ansic, D. (1997). Gender differences in risk behaviour in financial decision-making: An experimental analysis. Journal of Economic Psychology, 18, 605-628. http://dx.doi.org/10.1016/S0167-4870(97)00026-3
  • Raheja, S. and Dhiman, B. Does Investor Personality Determine their Risk Tolerance?
  • Roszkowski, M. J. and Grable, J. E. (2005). Estimating risk tolerance: The degree of accuracy and the paramorphic representations of the estimate. Financial Counseling and Planning, 16(2), 29-47.
  • Soane, E., Dewberry, C. and Narendran, S. (2010). The role of perceived costs and perceived benefits in the relationship between personality and risk‐related choices. Journal of Risk Research, 13(3), 303-318.
  • Tauni, M. Z.,Rao, Z. U. R., Fang, H., Mirza, S. S., Memon, Z. A. and Jebran, K. (2017). Do investor’s Big Five personality traits influence the association between information acquisition and stock trading behaviour?.China Finance Review International, 7(4), 450-477.
  • Unal, S. and Duger, Y. S. (2015). An empirical study of the relationship between the financial trait of academic staff and the trend of financial behaviour.
  • Wang, H. and S. Hanna, 1997. “Does Risk Tolerance Decrease with Age? Financial Counseling and Planning 8(2), pp. 27–32.
  • Watson, D. and Clark, L. A. (1997). Extraversion and its positive emotional core. In Handbook of personality psychology (pp. 767-793).
  • Zaidi, F. B. and Tauni, M. Z. (2012). Influence of investor’s personality traits and demographics on overconfidence bias. Institute of Interdisciplinary Business Research, 4(6), 730-746.
  • Zhao, H. and Seibert, S. E. (2006). The big five personality dimensions and entrepreneurial status: A meta-analyticalreview. Journal of Applied Psychology, 91(2), 259–271.
Toplam 52 adet kaynakça vardır.

Ayrıntılar

Birincil Dil İngilizce
Konular Finans, İşletme
Bölüm Articles
Yazarlar

Gokhan Ozer 0000-0002-3255-998X

Ummuhan Mutlu 0000-0002-6277-228X

Yayımlanma Tarihi 30 Eylül 2019
Yayımlandığı Sayı Yıl 2019 Cilt: 8 Sayı: 3

Kaynak Göster

APA Ozer, G., & Mutlu, U. (2019). THE EFFECTS OF PERSONALITY TRAITS ON FINANCIAL BEHAVIOUR. Journal of Business Economics and Finance, 8(3), 155-164. https://doi.org/10.17261/Pressacademia.2019.1122

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