Impact of Personality Traits on Investment Intention: The Mediating Role of Risk Behaviour and the Moderating Role of Financial Literacy (original) (raw)
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SSRN Electronic Journal, 2016
This study investigates the role of risk behaviour in mediating the association between personality traits and investment intention and moderating role of financial literacy between the association of risk behaviour and investment intention within a sample of 284 students with finance background. Regression analyses was executed in a series to test the impact of independent variables on dependent variables. Along this, separate models for the mediator and for the moderator were appraised to get more vibrant results. Results suggest that individuals who are active, sympathy toward others, determined, well-organized are more willing toward Investment. Further results revealed that risk behaviour partially mediates the relationship of Personality traits with STII. However, in case of Long run Risk behaviour partially mediates the relationship of "Extraversion", "Agreeableness" , "Openness to Experience", and "Conscientious" with LTII and fully mediate the relationship of "Neuroticism" and LTII. Beside this, Study revealed that financial literacy has significant impact on STII and LTII. However , financial literacy does not moderate the association of risk behaviour and investment intention. The study could have implications for financial managers, Financial institutions, and governments to comprehend the role of financial literacy and risk behaviour while advising individuals to make investment.
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The study examines the impact of financial literacy on investment decisions with the mediating effect of personality traits based on the big-five model. A total of 235 responses from Karachi were collected using the convenience sampling technique. The five-point Likert scale questionnaire was used alongside the Smart-PLS software for data analysis. The results suggest that financial literacy did not have a significant effect on investment decisions through agreeableness, conscientiousness and extraversion. However, financial literacy has a significant negative impact on investment decisions through openness to experience and a significant positive impact through neuroticism. The study helps improve our understanding of investor behavior by considering the mediating role of big five personality traits on the relationship between financial literacy and investment decisions. It is recommended that financial institutions should provide investment counseling services to prospective inves...
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Investment refers to various actions taken by individuals, including the younger generation in Indonesia, to prepare for the future. There are many programs around investment offered by the government in Indonesia for the short to long term. Therefore, this study aims to examine the direct and indirect effects of personality traits, financial literacy, and behavior and family support on investment intentions using a quantitative approach. In addition, this study is also intended to add to the limited empirical evidence regarding investment among students in Indonesia. The model of this research framework is based on collaboration between theory and previous research as a reference in strengthening the justification of the findings. The sample consisted of 341 students spread throughout Indonesia, while the data was collected using a questionnaire distributed online and analyzed using the Smart-PLS. The overall findings of this study indicate that personality, financial literacy, and...
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.
Individual Traits, Risk Perception, Financial Literacy Investment Decisions
Proceedings of the 5th Padang International Conference On Economics Education, Economics, Business and Management, Accounting and Entrepreneurship (PICEEBA-5 2020), 2020
The preferences of individual investors in making investment decisions are not only based on rational behavior like conventional financial science. Behavioral finance integrates a broad social science perspective in research in the field of financial economics. In this study, we investigate the variables that influence investment decisions in individual investors. The purpose of this study is to find out whether individual traits, risk perception and financial literacy affect investment decisions. We tested multiple linear regression with 475 survey respondents. We find that individual traits variables measured by emotional intelligence and locus of control affect the choice of investment instruments for individual investors. Individual traits variable measured by characteristic didn't affect investment decision. Risk perception affects investment decisions. Individual traits and risk perception variables were measured by several survey questions. We also find that financial literacy as measured by the scoring method influences investment decisions but not by financial literacy as measured by self-assessment. Only 37.47% (178 out of 475 people) respondents answered correctly over 80% of the financial literacy questions. Our result imply that policy makers should be careful to put financial advice forward as a mechanism to curb the ill effect of low financial literacy.
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Using theories from personality psychology and the theory of planned behavior, this study investigated those personality variables and psychological mechanisms through which individual investor intends to make investment decisions. The main purpose of this study was to examine the relationship between big five personality traits (Extroversion, Neuroticism, Conscientiousness, Openness to Experience and Agreeableness) and Investment decisions (Short term and long term). This study also examined the moderating effects of need for cognition, individual mood and mediating effects of financial selfefficacy between the study variables. Data was collected from 506 individual investors by using a questionnaire. Investors were selected from Pakistan Stock Exchange. Mediation analysis was performed using Hayes (2013) PROCESS macro in SPSS. Results of the study supported a positive relationship between openness to experience, extraversion and short term investment decision. Similarly a positive...
Impact of Personality Traits on Risk Tolerance and Investors' Decision Making
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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,...
Influence of Financial Literacy and Risk Perception on Choice of Investment
Procedia - Social and Behavioral Sciences, 2016
During recent years, variables affecting the investment preferences of individual investors are an issue attracting the attention of financial researchers. In this research, we investigate variables which are affecting investment preferences of individual investors. Personality trait is not an important variable, but on the other hand our evidence shows that level of financial literacy and risk perception are important. Besides, risk perception is also affected by financial literacy and gender, but marital status is not effective at the same level.
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.