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An Empirical Investigation for Determining of the Relation Between Personal Financial Risk Tolerance and Demographic Characteristic

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  • Adem Anbar

    (Uludag University Faculty of Economics and Administrative Sciences, Departman of Business Administration, Accounting and Finance)

  • Melek Eker

    (Uludag University Faculty of Economics and Administrative Sciences, Departman of Business Administration, Accounting and Finance)

Abstract

Financial risk tolerance is one of the key elements that should be considered in making investment decisions for both investment managers and investors. According to its importance, understanding and measuring of financial risk tolerance is not a simple topic. Therefore measuring of financial risk tolerance and determining of the factors that affect financial risk perceptions of individual investors have been interest of research and discussion for long yerars. The purpose of this study was to investigate the relationship between financial risk tolerance and demographic characteristics such as age, gender, marital status, number of children, income and total net assets. In the analysis of data from nearly 1,100 university students, logistic regression analysis, and t-test and ANOVA analysis were used. Logistic regression analysis indicated that gender, department and working in a job were significant predictors of financial risk tolerance. Results of t-test and ANOVA analysis indicated that gender, department, working in a job, monthly personal income, monthly family’s total income and total net assets were significant in differentiating individuals into risk tolerance levels, although age, marital status and number of children had no significant effect on financial risk tolerance.

Suggested Citation

  • Adem Anbar & Melek Eker, 2010. "An Empirical Investigation for Determining of the Relation Between Personal Financial Risk Tolerance and Demographic Characteristic," Ege Academic Review, Ege University Faculty of Economics and Administrative Sciences, vol. 10(2), pages 503-522.
    • Handle: RePEc:ege:journl:v:10:y:2010:i:2:p:503-522
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    Cited by:

    1. John Grable & Dee Warmath & Eun Jin Kwak, 2022. "An Assessment of the Association between Political Orientation and Financial Risk Tolerance," JRFM, MDPI, vol. 15(5), pages 1-16, April.
    2. Antonios Evangelou & Sune Ferreira-Schenk & Lorainne Ferreira & Elizabeth Bothma, 2022. "Investment Risk Tolerance amongst South African University Students in the Vaal Triangle Area," International Journal of Economics and Financial Issues, Econjournals, vol. 12(1), pages 13-23.
    3. Heena Thanki & Narayan Baser, 2019. "Interactive Impact of Demographic Variables and Personality Type on Risk Tolerance," Emerging Economy Studies, International Management Institute, vol. 5(1), pages 42-54, May.
    4. Hemrajani, Pragati & Rajni, & Khan, Muskan & Dhiman, Rahul, 2023. "Financial risk tolerance: A review and research agenda," European Management Journal, Elsevier, vol. 41(6), pages 1119-1133.
    5. Kumar Saurabh & Tanuj Nandan, 2019. "Role of financial knowledge, financial socialisation and financial risk attitude in financial satisfaction of Indian individuals," International Journal of Indian Culture and Business Management, Inderscience Enterprises Ltd, vol. 18(1), pages 104-122.
    6. Salem, Razan, 2019. "Examining the investment behavior of Arab women in the stock market," Journal of Behavioral and Experimental Finance, Elsevier, vol. 22(C), pages 151-160.
    7. 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.
    8. Heenkenda, Shirantha, 2014. "Determination of Financial Risk Tolerance among Different Household Sectors in Sri Lanka," MPRA Paper 67324, University Library of Munich, Germany.
    9. Yadav Devi Prasad Behera & Sudhansu Sekhar Nanda & Saroj Kumar Sahoo & Tushar Ranjan Sahoo, 2021. "The Compounding Effect of Investors’ Cognition and Risk Absorption Potential on Enhancing the Level of Interest towards Investment in the Domestic Capital Market," JRFM, MDPI, vol. 14(3), pages 1-18, February.
    10. Sandip Chattopadhyay & Ranjan Dasgupta, 2015. "Demographic and Socioeconomic Impact on Risk Attitudes of the Indian Investors - An Empirical Study," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 5(4), pages 601-623.
    11. Oluwatowo Monijesu Olaosun, 2025. "Socio-Economic Factors and the Demand for Insurance: A Study of Selected Sole-Proprietorship in Lagos Metropolis," International Journal of Economics & Business Administration (IJEBA), International Journal of Economics & Business Administration (IJEBA), vol. 0(2), pages 217-234.
    12. Beer, Francisca M. & Wellman, Joseph D., 2021. "Implication of stigmatization on investors financial risk tolerance: The case of gay men," Journal of Behavioral and Experimental Finance, Elsevier, vol. 31(C).
    13. Mahfuzur Rahman & Mohamed Albaity & Tarannum Azim Baigh & Md. Abdul Kaium Masud, 2023. "Determinants of Financial Risk Tolerance: An Analysis of Psychological Factors," JRFM, MDPI, vol. 16(2), pages 1-12, January.
    14. Ela Ostrovsky-Berman & Howard Litwin, 2019. "Social Network and Financial Risk Tolerance Among Investors Nearing and During Retirement," Journal of Family and Economic Issues, Springer, vol. 40(2), pages 237-249, June.
    15. Brooks, Chris & Sangiorgi, Ivan & Hillenbrand, Carola & Money, Kevin, 2019. "Experience wears the trousers: Exploring gender and attitude to financial risk," Journal of Economic Behavior & Organization, Elsevier, vol. 163(C), pages 483-515.
    16. Zhu, Alex Yue Feng, 2019. "Financial risk tolerance of Hong Kong adolescents: A hierarchical model," Children and Youth Services Review, Elsevier, vol. 102(C), pages 193-200.
    17. Adem Anbar & Melek Eker, 2019. "The Effect of Sociodemographic Variables and Love of Money on Financial Risk Tolerance of Bankers," Business and Economics Research Journal, Bursa Uludag University, Faculty of Economics and Administrative Sciences, vol. 10(4), pages 855-866.
    18. Sandip Chattopadhyay & Ranjan Dasgupta, 2015. "Demographic and Socioeconomic Impact on Risk Attitudes of the Indian Investors - An Empirical Study," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 5(4), pages 601-623, April.
    19. Brian Lucey & Charles Larkin, 2012. "Risk Tolerance and Demographic Characteristics: Preliminary Irish Evidence," The Institute for International Integration Studies Discussion Paper Series iiisdp406, IIIS.
    20. Oluwatowo Monijesu Olaosun, 2025. "Socio-Economic Factors and the Demand for Insurance: A Study of Selected Sole-Proprietorship in Lagos Metropolis," International Journal of Finance, Insurance and Risk Management, International Journal of Finance, Insurance and Risk Management, vol. 15(3), pages 37-52.
    21. Lin Li, 2023. "Investigating risk assessment in post-pandemic household cryptocurrency investments: an explainable machine learning approach," Journal of Asset Management, Palgrave Macmillan, vol. 24(4), pages 255-267, July.
    22. Brooks, Chris & Williams, Louis, 2021. "The impact of personality traits on attitude to financial risk," Research in International Business and Finance, Elsevier, vol. 58(C).
    23. Heena Thanki & Sweety Shah & Vrajlal Sapovadia & Ankit D. Oza & Dumitru Doru Burduhos-Nergis, 2022. "Role of Gender in Predicting Determinant of Financial Risk Tolerance," Sustainability, MDPI, vol. 14(17), pages 1-13, August.
    24. Yılmaz Bayar & H. Funda Sezgin & Ömer Faruk Öztürk & Mahmut Ünsal Şaşmaz, 2020. "Financial Literacy and Financial Risk Tolerance of Individual Investors: Multinomial Logistic Regression Approach," SAGE Open, , vol. 10(3), pages 21582440209, July.
    25. Khairani Saladin & Marwan Asri & Rahmat Eka Putra & Alfi Husni Fansurya, 2025. "Gender and Investment Literacy on Investors Behaviour: Evidence from Indonesian Beginners Investors," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 2, pages 146-162.

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    Keywords

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    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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