Factors Affecting Risk Tolerance Capacity of Investors: An Empirical Study in Ahmedabad
The Journal of Management and Cooperation, Vol. 10, No. 2, 2013
13 Pages Posted: 16 Dec 2015
Date Written: January 2013
The reforms era of the nineties in India has led to the proliferation of the financial services industry and the introduction of several financial products and services. The myriad products have also given a lot of options to the investors for channelizing their savings. However, the choice of instruments depends on the demographic and psychographic factors of the individuals as well as the characteristic features of the products viz. risk, return, liquidity, tenure, etc. Several studies (Edward et al, Bernard and Schiff, Chen and Volpe, etc.) have proved that women are more risk averse than men. While, there are studies (Meier-Pesti & Penz, Ohm et al, Hanna et al, etc.) which have proved that there is no significant difference in the risk taking capacity of males and females.
The present study is aimed at finding out whether there is any difference in risk taking capacity related to the gender of the investor. This research is an empirical study based on the responses of 150 investors in Ahmedabad. Analysis was done using Descriptive statistics, Student’s t- test, and ANOVA in SPSS 20. The risk tolerance scores of all investors were calculated and categorized, and then an effort was made to relate the demographic factors to the risk appetite. The research concluded that there was a significant difference in the risk tolerance level of males and females, and income and profession also had an impact on the risk appetite. Also, profession was the only attributable factor which impact the difference in behaviour of males and females in making financial investment decisions.
Keywords: Risk tolerance, Gender differences, Investment
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