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An Empirical Analysis of Financial Risk Tolerance and Demographic Factors of Business Graduates in Pakistan

Author

Listed:
  • Naveed Hussain Shah

    (Department of Management Sciences, University of Swabi, Khyber Pakhtunkhwa, Pakistan)

  • Waqar Khalid

    (PhD Research Scholar, Department of Economics, Near East University, TRNC/Nicosia, North Cyprus,)

  • Saifullah Khan

    (Department of Business Studies, Pakistan Institute of Development Economics, Islamabad, Pakistan,)

  • Muhammad Arif

    (Department of Management Sciences, University of Swabi, Khyber Pakhtunkhwa, Pakistan)

  • Muhammad Asad Khan

    (Department of Management Sciences, National University of Modern Languages, Peshawar, Khyber Pakhtunkhwa, Pakistan.)

Abstract

The purpose of this empirical study was to investigate whether financial risk-tolerance differs among business graduates in Pakistan based on their demographic factors (i.e., gender, age, education, experience, income, saving, location, and occupation). This study has tested the financial risk-tolerance scale developed by Grable and Lytton (1999) to empirically measure the different dimensions of financial risk. The study employed a quantitative approach to a multinomial logistic regression model and an online questionnaire tool for the primary data collection. The well-designed questionnaires were distributed among business graduates through online media. The empirical findings of the study depicted a significant positive effect from all the demographics against financial risk-tolerance. Specifically, the results showed that male business graduates having more income and savings, those with more education qualifications and also older graduates are positively related to financial risk-tolerance. However, the relationship between financial risk-tolerance and experience level of individuals was found negative and insignificant, and the same result between the two variables can be confirmed by the findings of the correlation analysis. Furthermore, the parametric study showed that geographical differences exist among business graduates in terms of financial risk-tolerance attitudes.

Suggested Citation

  • Naveed Hussain Shah & Waqar Khalid & Saifullah Khan & Muhammad Arif & Muhammad Asad Khan, 2020. "An Empirical Analysis of Financial Risk Tolerance and Demographic Factors of Business Graduates in Pakistan," International Journal of Economics and Financial Issues, Econjournals, vol. 10(4), pages 220-234.
    • Handle: RePEc:eco:journ1:2020-04-27
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    Cited by:

    1. Anzel van den Bergh-Lindeque & Sune Ferreira-Schenk & Zandri Dickason-Koekemoer, 2021. "Individual Investor Risk Tolerance from a Behavioural Finance Perspective in Gauteng, South Africa," International Journal of Economics and Financial Issues, Econjournals, vol. 11(4), pages 53-65.
    2. Anzel Van den Bergh-Lindeque & Sune Ferreira-Schenk & Zandri Dickason-Koekemoer & Thomas Habanabakize, 2022. "What makes risk-averse investors tick? A practitioners guide," Cogent Economics & Finance, Taylor & Francis Journals, vol. 10(1), pages 2111786-211, December.

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    More about this item

    Keywords

    Risk tolerance; Demographic factors; Financial risk; Multinomial logistic regression; Cross regions.;
    All these keywords.

    JEL classification:

    • G1 - Financial Economics - - General Financial Markets
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G41 - Financial Economics - - Behavioral Finance - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making in Financial Markets

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