Impact of Personality Traits on Risk Tolerance and Investors' Decision Making (original) (raw)
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Impact of Personality Traits on Stock Market Investors with Regard to Risk Tolerance
Journal of Pharmaceutical Negative Results, 2022
The study examines the impact of personality traits on investment decisions based on the big-five model. A total of 100 responses from Cochin 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 personality traits did have a significant effect on investment decisions through agreeableness, conscientiousness and extraversion. However, risk tolerance 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 behaviour by considering the mediating role of big five personality traits on the relationship between risk tolerance and investment decisions. It is recommended that financial institutions should provide investment counselling services to prospective investors using the consumer profile technique.
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.
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...
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 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 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.
Artificial Intelligence, 2020
Investment decisions could be affected by behavioral biases associated with personal characteristics. This study empirically investigates the effect of personal characteristics on investors’ investment decision through risk tolerance. Furthermore, investment experience moderates the nexus between personal characteristics and risk tolerance. The scale consisting of 24 items was used related to selected constructs and variables. Data was collected form 175 individual investors of Pakistan Stock Exchange. PLS-SEM was used to make statistical analysis. The findings indicate that extraversion has substantial positive impact on investment decisions. Moreover, risk tolerance partially mediates the relationship between extroversion and investment decisions. The relationship between introversion and investment decisions is negative and risk tolerance partially mediates the aforesaid relationship. Furthermore, it is statistically proved that investment experience substantially moderates the a...
IAEME PUBLICATION, 2021
The study attempts to explore a relationship between demographic factors of investors and their individual personality traits with risk tolerance in financial products investment. A highly reliable questionnaire is applied to collect data from 369 respondents. Multiple regression technique and various research procedures are applied for data analysis. The empirical results reveal that personality traits influence financial risk tolerance. Similarly, age, gender and monthly income possess a relationship with investment risk tolerance. Therefore, this study provides a guidance to financial managers involved in development of investment policies.
Impact of Personality Traits on Investment Intention: The Mediating Role of Risk Behaviour and the Moderating Role of Financial Literacy, 2019
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.
ZENITH International Journal of Business Economics & Management Research, 2014
An investor's decision regarding investment is influenced by a number of factors. Many researchers have concluded that risk tolerance level of investors plays a vital role in making investment decision. It is therefore importance to measure the risk tolerance level of investors. Many studies have concluded that risk taking capabilities of an individual is based on his basic demographic characteristics such as age, gender, marital status, income level, education, family background and occupation etc. yet no major systematic effort has been made to ascertain the impact of personality trait of an individual on his risk taking behavior.In the proposed study an attempt has been made to ascertain the relationship of (a) demographic variables (b) personality trait on risk taking behavior of investors.