Factors affecting UK household financial risk-taking and their implications for consumption of financial investments

Amee Kim, Frederique J. Vanheusden and Mamunur Rashid

International Review of Economics & Finance, 2025, vol. 103, issue C

Abstract: Household financial risk-taking (FRT) diminishes during economic downturns or periods characterized by high cost of living to preserve household wealth, economic safety and wellbeing, leading to significant reductions in consumption. Yet the exact mechanisms behind these changes in FRT are not understood. The study investigates FRT within households residing in the UK using a structured questionnaire survey on 215 families. The study is designed around the theory of planned behavior. Data are analyzed using confirmatory factor analysis (CFA) and Structural Equation Modeling. Results are validated using bootstrapping. Multiple regression analysis and mean difference tests are conducted to examine sensitivity of FRT to various demographic and social factors. The results indicate profound influence of attitude, subjective norms, and perceived behavioral control, alongside culture, on FRT practices within UK households. We forward that FRT is intentional, utilized in situations where it is deemed safe for the family and eschewed by families with a higher level of behavioral control. Results also imply an urgent need to address effectively the key aspects pertaining to household wellbeing, gender diversity, and power sharing among partners within the family.

Keywords: Risk-based bank selection; Household finance; Financial risk-taking; United Kingdom; Theory of planned behavior; COVID-19 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:reveco:v:103:y:2025:i:c:s1059056025007300

DOI: 10.1016/j.iref.2025.104567

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