Determinants of Financial and Non-Financial Risk Tolerance among Students at Selected South African Universities

Ramudzuli Pfano Michael () and Muzindutsi Paul-Francois ()
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Ramudzuli Pfano Michael: Alufheli Holdings,Johannesburg, South Africa
Muzindutsi Paul-Francois: University of KwaZulu-Natal, School of Accounting, Economics and Finance,KwaZulu-Natal,South Africa

Foundations of Management, 2018, vol. 10, issue 1, 293-302

Abstract: To enhance the portfolio allocation process, individuals need to understand their financial ability and psychological willingness to tolerate risks. To do this, their risk tolerance level must be quantified. This study used a survey questionnaire to collect data from 470 students at selected South African universities, and a binary logistic regression to test the effect of demographic factors on financial risk tolerance versus non-financial risk tolerance. Our findings suggest that the level of risk tolerance cannot be generalized across different risk domains. We also found that demographic factors affect the two domains of risk tolerance differently. Specifically, age did not have a significant influence on financial risk tolerance, while it significantly increased non-financial risk tolerance. Similarly, gender did not have any significant influence on non-financial risk tolerance, while it positively affect-ed financial risk tolerance. Furthermore, students in the fields of the humanities, engineering and IT showed a strong appetite for non-financial risks, but students in the commerce faculty preferred financial risks.

Keywords: risk tolerance; financial risk tolerant; non-financial risk tolerant; demographic factors (search for similar items in EconPapers)
Date: 2018
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Persistent link: https://EconPapers.repec.org/RePEc:vrs:founma:v:10:y:2018:i:1:p:293-302:n:22

DOI: 10.2478/fman-2018-0023

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