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Financial risk-taking and trait emotional intelligence

Author

Listed:
  • Alessandro Bucciol
  • Federico Guerrero
  • Dimitra Papadovasilaki

Abstract

Purpose - The purpose of this paper is to study the relationship between financial risk-taking and trait emotional intelligence (EI). Design/methodology/approach - An incentivized online survey was conducted to collect the data, including measurements for cognitive ability and socio-demographic characteristics. Findings - There is a positive correlation between trait EI and financial risk-taking that is at least as large as that between risk-taking and measures of cognitive control (CRT). Trait EI is a key determinant of risk-taking. However, not all components of trait EI play an identical role. In fact, we observe positive effects of well-being, mainly driven by males and sociability. Self-control seems to matter only for males. Research implications/limitations - This study suffers from the bias of self-reported answers, a common limitation of all survey studies. Practical implications - This evidence provides a noncognitive explanation for the typically observed heterogeneity of financial risk-taking, in addition to more established explanations linked to cognitive skills. Investor profiles should bealsodetermined on their trait EI. Social implications - Governments should start programs meant to improve the level of trait EI to ameliorate individual wealth outcomes. Female investors participation in the financial markets might increase by fostering their sociability. Originality/value - The relationship between trait EI and each of its components with financial risk-taking is vastly unexplored, while it is the first time that gender effects are discussed in that set up.

Suggested Citation

  • Alessandro Bucciol & Federico Guerrero & Dimitra Papadovasilaki, 2020. "Financial risk-taking and trait emotional intelligence," Review of Behavioral Finance, Emerald Group Publishing Limited, vol. 13(3), pages 259-275, May.
    • Handle: RePEc:eme:rbfpps:rbf-01-2020-0013
    DOI: 10.1108/RBF-01-2020-0013
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    Citations

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    Cited by:

    1. Farhan Mirza & Naveed Iqbal Chaudhry & Erum Shaikh & Noor Shafique & Ding Hooi Ting, 2026. "Emotional intelligence and personality traits in social entrepreneurial risk-taking: a hierarchical model of intentions among Pakistani University students," Journal of Global Entrepreneurship Research, Springer;UNESCO Chair in Entrepreneurship, vol. 16(1), pages 1-20, December.
    2. Goodell, John W. & Kumar, Satish & Rao, Purnima & Verma, Shubhangi, 2023. "Emotions and stock market anomalies: A systematic review," Journal of Behavioral and Experimental Finance, Elsevier, vol. 37(C).
    3. Synthia Imam & Alberto Ibañez Fernandez & Gyanendra Singh Sisodia & Juan Antonio Jimber del Río & Ahmed Al Radaideh, 2022. "Emotional Intelligence and Personal Finances in the Academic Curricula: A Critical Analysis of Their Potential Synergies," Asian Culture and History, Canadian Center of Science and Education, vol. 14(1), pages 1-6, April.

    More about this item

    Keywords

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    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making

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