The Key Determinants of Financial Risk Tolerance Among Gen-Z Investors: Propensity for Regret, Propensity for Overconfidence and Income Level

Florentina Kurniasari () and Prio Utomo ()
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Florentina Kurniasari: Universitas Multimedia Nusantara
Prio Utomo: Universitas Multimedia Nusantara

A chapter in Eurasian Business and Economics Perspectives, 2023, pp 289-298 from Springer

Abstract: Abstract Gen-Z investors in the Indonesian stock market have grown in recent years. Propensity for regret, overconfidence along with individual income are determinant elements in measuring investor’s acceptance level toward risk. The aim of the research is to analyze the effects of propensity for regret and overconfidence with the addition of individual income level variable toward financial risk tolerance behavior in the context of Indonesian Gen-Z investors. The study was performed by collecting questionnaires from 186 unmarried Gen-Z stock investors domiciled in Greater Jakarta areas. The finding showed that the propensity for overconfidence had the best effect on risk tolerance followed with the income level. Meanwhile, the propensity for regret had the lowest impact in the Gen-Z risk tolerance in stock investment. Since propensity for overconfidence is associated with the individual understanding of cognitively complicated financial principles, it’s essential for the stakeholders in the financial ecosystem to educate better about financial information and knowledge to Gen-Z investors. They need to provide necessary data available and reachable for the Gen-Z investors as an early consideration when making investment decisions.

Keywords: Propensity for regret; Propensity for overconfidence; Income level; Risk tolerance; Gen-Z stock investors (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:spr:eurchp:978-3-031-36286-6_17

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DOI: 10.1007/978-3-031-36286-6_17

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