What makes risk-averse investors tick? a practitioners guide
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Date
2022-08-06
Journal Title
Journal ISSN
Volume Title
Publisher
Cogent Economics & Finance
Abstract
The real challenge to many practitioners in the financial and investment
sector is to accurately profile risk-averse investors to still be inclusive of these
investors in the wealth creation process. This study aims to profile risk-averse
investors through a structural equation model based on endogenous and exogenous
factors. The final sample size consisted of 463 individual investors in the
economic hub of South Africa, Gauteng province. These endogenous and exogenous
factors may bring about increases or decreases in the risk tolerance levels of
investors and accordingly, influence their decisions to initiate, amend or terminate
financial behaviours. These factors significantly contributed towards explaining lowrisk
tolerance behaviour, which assisted with the successful development of
a model to profile the risk tolerance behaviour of risk-averse investors. This risk
profiling model makes a remarkable and unique contribution to the field of study
and the financial industry, since it will assist financial practitioners to profile the risk
tolerance behaviour of risk-averse investors more accurately, which will lead to the
successful implementation of investment strategies.
Description
article
Keywords
risk-averse, investors, low-risk tolerance behaviour, endogenous factors, exogenous factors, risk profiling, investment decisions, structural equation modelling, South Africa
Citation
Anzel Van den Bergh-Lindeque, Sune Ferreira-Schenk, Zandri Dickason-Koekemoer & Thomas Habanabakize (2022) What makes risk-averse investors tick? A practitioners guide, Cogent Economics & Finance, 10:1, 2111786, DOI: 10.1080/23322039.2022.2111786