Influence of Demographic Variables on Investor’s Risk Tolerance Behavior: Empirical Study on Bangladesh
Keywords:
Influence, Demographic, Investor’s, Variables, ToleranceAbstract
Research purpose: The risk tolerance behavior of an individual investor depends on many factors.
This paper focuses on the impact of demographic factors on investors’ risk tolerance.
Design/methodology/approach: A structured questionnaire was developed to collect the primary
data to find the relationship and influence of demographic variables on the risk tolerance level of
individual investors. Six demographic factors are considered as independent variables for the study
which are namely gender, age, marital status, education, profession, and annual income level. The
risk tolerance level of the investor is considered a dependent variable for the analysis. Data is being
collected from the investor who is trading actively in the Bangladeshi financial market through
questionnaires survey. Total 436 responses are collected from the investors. The data has tested its
reliability and validity through the statistical tool of SPSS-16.
Findings: After analysis of the data, three demographic variables, namely gender, age, and marital
status, have a negative relationship with the risk tolerance behavior of the investor, whereas the
other three demographic variables, such as education, profession, and annual income, are positively
correlated with the dependent variable. It is also found that gender, age, education level and income
level have a significant impact on risk tolerance during the investment decision of an individual
investor.
Originality/value and practical implications: Financial experts can suggest an investment portfolio
for different people who have other risk tolerance levels based on demographic factors.
Research limitation: Collecting data from all over the country is a significant limitation of this study.
Keywords: Demographic variables, Risk tolerance, Investment, Investor, Financial market
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