The influence of emotion on financial risk tolerance

Abstract

The main objective of this study was to analyze the influence of emotion on financial risk tolerance. The factors of emotions which were taken as independent variables to analyze the influence on financial risk tolerance were financial threat, optimism, trust, deliberate thinking and family financial socialization. The study was based on the survey among 150 respondents conducted by distributing questionnaire. The questionnaire was based on 5 Likert scale. Once the responses were collected, it was organized and analyzed by using MS Excel and SPSS. The statistical tools used for analysis were descriptive analysis, correlation analysis and multiple regression analysis.

Most of the respondents were male and aged between 20 and 30. Majority of the respondent had completed Bachelor’s degree. Most of them were private employee closely followed by the students. Majority of them had the annual income between 2 to 5 lakhs. Descriptive analysis revealed that all the variables were of great significance. Among them the statement regarding the variables under study, deliberate thinking had stronger agreement which was closely followed by family financial socialization and financial risk tolerance. The correlation analysis showed that all the variables had positive relation with financial risk tolerance. However financial threat, optimism, deliberate thinking and family financial socialization were significant and trust was insignificant. To analyze the impact of multiple variable multiple regression analysis was used. It was found that four independent variables namely financial threat, optimism, trust and family financial socialization had significant impact on financial risk tolerance while deliberate thinking was found to be insignificant.