<abstract xmlns="http://www.w3.org/1999/xhtml"><p>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.</p></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.

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

Foundations of Management

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 License.

To enhance the portfolio allocation process, individuals need to understand their financial ability and psychological willingness to tolerate risks. To do...

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

Published Online: Dec 31, 2018

Page range: 293 - 302

DOI: https://doi.org/10.2478/fman-2018-0023

Keywords
risk tolerance, financial risk tolerant, non-financial risk tolerant, demographic factors

© 2018 Pfano Michael Ramudzuli, Paul-Francois Muzindutsi, published by Sciendo

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 License.

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

Published Online: Dec 31, 2018

Page range: 293 - 302

DOI: https://doi.org/10.2478/fman-2018-0023

Keywordsrisk tolerance, financial risk tolerant, non-financial risk tolerant, demographic factors

© 2018 Pfano Michael Ramudzuli, Paul-Francois Muzindutsi, published by Sciendo

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 License.

Keywords
risk tolerance, financial risk tolerant, non-financial risk tolerant, demographic factors