Impact of Personality Traits on Stock Market Investors with Regard to Risk Tolerance (original) (raw)
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The Journal of Asian Finance, Economics and Business
This empirical research is aimed at testing the relationship of the big five personality traits namely openness to experience, extraversion, consciousness, agreeableness, neuroticism, and risk aversion with the investment intention of individual investors belonging to Balochistan, Pakistan. The primary data is collected through a self-administered questionnaire (a structured form that consists of a series of closed-ended and open-ended questions) from a sample of 397 active individual investors belonging to different districts of the province. The data is empirically analyzed by applying the Partial Least Square (PLS) path modeling technique by using the estimation package available in Smart-PLS. The findings of this study suggest that all the variables are statistically significant with investors' investment intention with risk aversion as the strongest predictor. Moreover, openness to experience, extraversion, consciousness, agreeableness, and risk are significantly and positively related to an investor's investment intention, whereas neuroticism is negatively related to an investor's investment intention. The results extended by this study can be used by financial planners and investment bankers to channelize the available financial resources in diversified portfolios. The results will help financial planners to make available diverse investment alternatives for investors in Balochistan, thus catering to their unique needs. Academia must offer courses on contemporary finance paradigm based on behavioral finance to enable future business graduates to make wise financial decisions.
Impact of Personality Traits on Risk Tolerance and Investors' Decision Making
2019
This article investigates the relationships between personality traits, risk tolerance, and investment decisions and highlights the importance of personality traits in determining risk tolerance levels and investment decisions. Personality traits are classified according to the Big Five taxonomy: extroversion, agreeableness, conscientiousness, neuroticism and openness to experience. Primary data was collected from 330 individual investors from Islamabad. Descriptive analysis of the data was run on SPSS, reliability of the constructs was assessed through Confirmatory Factor Analysis (CFA), whereas, Structural Equational Modelling (SEM) was used to conduct hypothesis testing through path analysis. As per the results of CFA, the constructs were found to be reliable. Mediation analysis confirmed that risk tolerance partially mediated the relationship between personality traits and investment decisions. This study and results have theoretical and practical implications for the investors,...
Personality Traits and Investment Choices of Investor
International Journal of All Research Education \& Scientific Methods 9 (6 {\ldots}, 2021
Behavioural finance, which considers human behaviour in finance, is a relatively recent field, despite the fact that finance has been studied for thousands of years. Behavioural finance models, which are focused entirely on psychology, attempt to comprehend how emotions and personality influence the behaviour of individual traders. The study's main aim is to look at the behavioural factors that influence individual buyers' decisions on the NSE and BSE Stock Exchanges. The data collected from the Students, Professionals through structured questionnaire were examined and data collected were analysed using Cronbach's Alpha Reliability Test, based totally on which, hypotheses are proposed. The theories are then tested using questionnaires provided to individual customers, college students, and practitioners. The result indicates that there are five personality traits affecting the funding selections of person investors at the NSE & BSE Stock Exchange: extraversion, agreeableness, openness to experience, conscientiousness, and neuroticism. This takes a look at also tries to discover the correlation among these personality traits and investment overall performance. Every investor has a unique set of circumstances and interests, and therefore a unique perspective on financial risk and financial objectives. Investors vary in terms of their locus of influence as well as their personality traits. The findings reveal that the aspects of neuroticism, extraversion, and openness to experience have a fine mediated relationship with the investors' investment portfolio. All the personality traits have the significant relationship with the investment choices. Psychographic considerations play a significant role in deciding an individual's investing behaviour. Investment decisions carry inherent risks in themselves. A person's risk assessment is influenced by a variety of influences, one of which is the collection of personality characteristics he or she possesses. Furthermore, each individual is unique and has different financial goals. Individuals can be classified into personality groups depending on their individual psychology, which influences the investor's risk mindset and, as a result, his investment plans.The decision-making process for an individual investor can be seen as a constant process that has a profound effect on their psychology when making investment decisions. To recognise and interpret investment choices, behavioural finance focuses on individual and social recognition testing as well as emotional tolerance tests. Behavioural finance, which considers human behaviour in finance, is a relatively recent field, despite the fact that finance has been studied for thousands of years. Behavioural finance models, which are focused entirely on psychology, attempt to comprehend how emotions and personality influence the behaviour of individual traders. In the current economy, capital market investing is critical.The study's main aim is to look at the behavioural factors that influence individual buyers' decisions on the NSE and BSE Stock Exchanges. The present study aims to study the relationship between personality traits (big five model) and the investment choices of investor. The data collected from the Students, Professionals through structured questionnaire were examined and data collected were analysed using Cronbach's Alpha Reliability Test, based totally on which, hypotheses are proposed. The theories are then tested using questionnaires provided to individual customers, college students. The result of the research study proves that the personality traits have influence towards the choices of the investor. The findings reveal that all five personality traits have the significant relationship with the investment choices.
Personality Traits and Risk Profile Influencing Attitude of Investor
Paripex Indian Journal Of Research, 2015
Behavioural finance is an emerging field to understand the psychology of the investor in various investment avenues. In the present scenario investment in stock market plays a vital role. Investment in this avenue is made by both individual and by institutions. ULIP, Mutual funds set an example as institutions investing in stock market. The present study aims to study the relationship between personality traits (big five model) and risk profile of the investors attitude. The result of the research study proves that the personality traits do not have much influence towards the attitude of the investor as the investor most wisely invest in diversified portfolio to minimize their risk. Moreover the investor invests mainly for tax gaining purpose and to meet their future expenses.
Personality Traits and Risk Perception of Indian Investors
Ms. Fozia Mehtab | Dr. H Nagraj, 2019
The present research paper explores the relation between the personality traits of individual investors and their risk perception in the investment management by using personality traits of MBTI Personality Model given by Carl Gustav Jung. Data has been collected from 1000 individual Indian investors by using judgment sampling through a structured questionnaire. The data has been analyzed through linear regression analysis by the use of SPSS version 24. The results of the study indicate a significant relationship between personality traits and risk perception of the investors. The findings of the study could be useful for individual investors in improving their investment decisions and consequently the investment return by understanding their personality traits and the adverse effects of them on their risk perception towards investment decisions. Apart from this the financial advisors also could take advantage from the findings of the present study by understanding the personality t...
Personality Traits and Risk Tolerance among Young Investors
VOLUME-8 ISSUE-10, AUGUST 2019, REGULAR ISSUE, 2019
India is a developing nation with highest number of youths in world. The youth is growing in the era of internet, least fare Wi-Fi connections. They have ample of knowledge available at one click. For any decision they search multiple options which give them sense that they are opting for the best and will reduce the chances of setbacks. Although every individual vary in their risk taking capacity and the capacity to tolerate setbacks is mostly related to kind of personality characteristics an individual carry. Present study is an attempt to identify the kind of relationship between personality types in (BIG Five model) and risk tolerance among youth. There are five personality traits measured through BIG Five namely; Extraversion, Agreeableness, Conscientiousness, Neuroticism (Emotional Instability) and Openness to Experience. The study intended to ask whether these personality types play an important role in deciding tolerance behavior among young investors. The data was collected...
Problems and Perspectives in Management
Personality traits are qualities that make a person distinctive and describe stable behavior patterns. Therefore, understanding the influence of personality traits on behavioral intention will help predict investors’ investment decisions. This study aims to assess the impact of personality traits, i.e., openness to experience, neuroticism, conscientiousness, agreeableness, and extraversion, on investors’ behavioral intentions. Moreover, it assesses the mediating effect of attitude, subjective norms, and perceived behavioral control between investors’ personality traits and behavioral intention. The study employed a structured questionnaire on a sample of 413 retail investors. Further, obtained data were empirically examined on Smart-PLS 3.3 using the PLS-SEM method. The study found that perceived behavioral control, subjective norms, and attitude positively affected behavioral intention. However, the personality traits did not influence the intention directly. Further, mediation ana...
OPUS, 2017
Times are changing and so are investors, investment options and investment managers. Investment managers need to bring together a dynamic mix of understanding of the financial market and the investor's profile. The study is aimed at identifying relationship between demographic variables, risk taking behaviour, investor biases, investment pattern and MBTI personality assessment of investors in India. Myers-Briggs Type Indicator (MBTI) is an individual personality preference instrument; which has been used in this paper to predict investment biases. This relationship should throw some light on how should investment managers respond to changing investment behavior based on investors' personality types. It was seen that most of the sample investors are balanced or conservative in terms of their investment behaviour. MBTI personality types are a significant factor which affects risk taking behaviour of investors. Age, gender, work place activity, marital status are non significant factors to shape up investor`s risk taking behaviour. The results of this study can be highly useful for investment advisors, portfolio managers, and financial investment agencies as they can choose and define a product for their clients based on their gender, age, work experience, marital status, personality type and risk taking attitude. The investment advisors should try to evaluate personality of their client before offering them any product.
Jurnal Manajemen Teori dan Terapan| Journal of Theory and Applied Management, 2021
Each investor has an investment plan to reach their investment objectives. Perceived investment performance was affected by a high level of the psychological aspect. The purpose of this study was to test the effect of the Big Five personality traits on the perception of investment performance. This study also tests the moderating role of social interaction. PLS-SEM was used to test the hypotheses. Used individual stock investors in Indonesia, the findings showed that openness personality had a negative effect on perceived investment performance. Otherwise, conscientiousness, extraversion, agreeableness, and neuroticism had a positive impact on perceived investment performance. The results also show that social interaction moderates the relationship between conscientiousness, agreeableness, and perceived investment performance. This result shows that information selection and investment knowledge is important when allocating asset to achieve investment objectives.
Quality & Quantity
This paper aims to explore the relationship between big-five personality traits and investment behavior, particularly in the Indian context. Riding on the theory of planned behavior (TPB), we built a multi-layered moderated moderated-mediation model exploring the complex relationships between personality traits, investment attitude, and investment strategy. We collected data from 934 respondents from the southern part of India and analyzed using the Hayes (2018) PROCESS macros to test the hypotheses. The results indicate that (i) Personality traits (extraversion, emotional stability, conscientiousness, agreeableness, and openness to experience) are positively related to investment attitude and investment strategy, (ii) Investment attitude is positively related to investment strategy, (iii) Risk capacity moderates the relationship between personality traits and investment attitude, and (iv) Investment priority (second moderator) moderates the moderated relationship between personality traits, risk capacity (first moderator), and investment strategy mediated through investment attitude. Finally, the implications for behavioral finance and practicing managers are discussed.