Influence of personality, biases on financial risk tolerance among retail investors in India
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Author(s)Aniruddha S RaoLink to ORCID Index: https://orcid.org/0000-0002-3419-8284
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Savitha G LakkolLink to ORCID Index: https://orcid.org/0000-0003-3828-5251
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DOIhttp://dx.doi.org/10.21511/imfi.21(3).2024.21
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Article InfoVolume 21 2024, Issue #3, pp. 248-264
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- 154 Views
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43 Downloads
This work is licensed under a
Creative Commons Attribution 4.0 International License
Investors’ personality traits and psychological biases play a crucial role in the decision-making process and risk-taking behavior of investors. The emotional and psychological factors impact the decision-making, giving rise to biases. These biases make investors make irrational decisions, which signifies the need for this study. This study aims to assess investors’ personalities using HEXACO model and its interaction with biases and financial risk tolerance. The data of 530 retail investors in India, who had more than 2 years of investing experience in the stock market, were collected. The study considered the HEXACO model since it captures all dimensions of personality that are not considered in the commonly used Big Five Model (BFM). The result of structural equation modeling and mediation analysis shows that the ‘honesty-humility’ trait significantly affects overconfidence bias. The mediation analysis of biases between traits and financial risk tolerance showed complete, partial, and no mediation effect depending on the nature of prejudice. Clear distinction of personality traits into ‘virtue traits’ and ‘character traits’ can be observed. This clear distinction paves the way for employing the HEXACO model in future studies.
- Keywords
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JEL Classification (Paper profile tab)G40, G41, D81, G32
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References74
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Tables8
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Figures1
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- Figure 1. Structural equation model of personality traits, biases and financial risk
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- Table 1. Recent studies using personality model, biases, and the dependent variable
- Table 2. Fit indices for the measurement model between personality traits, biases and financial risk tolerance
- Table 3. Fit indices for the structural model between personality traits, biases and financial risk tolerance
- Table 4. Estimated regression weights of personality traits and emotional biases – Hypothesis 1
- Table 5. Estimated regression weights of personality and financial risk tolerance – Hypothesis 2
- Table 6. Estimated regression weights of emotional biases and financial risk tolerance – Hypothesis 3
- Table 7. Summary of mediation analysis between personality traits, biases and financial risk tolerance – Hypothesis 4
- Table 8. Pattern matrix of HEXACO, biases and financial risk tolerance items and their factor loadings
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The role of personality traits, financial literacy and behavior on investment intentions and family support as a moderating variable
Bambang Widagdo 
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Kenny Roz
doi: http://dx.doi.org/10.21511/imfi.19(2).2022.12
Investment Management and Financial Innovations Volume 19, 2022 Issue #2 pp. 143-153 Views: 1138 Downloads: 596 TO CITE АНОТАЦІЯInvestment 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 behavior have a significant effect on investment intentions among students in Indonesia. Furthermore, financial behavior indicates the role of intermediaries, while family support does not strengthen the effect of financial literacy on investment intentions among students in Indonesia. The students who take financial management courses will be more aware of the importance of financial literacy and financial behavior for investment intentions. Recommendations for further research can relate other variables affecting investment intentions that were not examined in this study.
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Generation Y consumers’ perceived brand personality of South African retail banks
Marko van Deventer ,
Nkosinamandla Erasmus Shezi
doi: http://dx.doi.org/10.21511/bbs.16(3).2021.12
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Influence of personality traits on creativity and innovative work behavior of employees
Nguyen Kim Nam ,
Nguyen Thi Hang Nga
doi: http://dx.doi.org/10.21511/ppm.22(2).2024.30
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