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Individual financial risk tolerance and the global financial crisis
Author(s) -
Gerrans Paul,
Faff Robert,
Hartnett Neil
Publication year - 2015
Publication title -
accounting and finance
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.645
H-Index - 49
eISSN - 1467-629X
pISSN - 0810-5391
DOI - 10.1111/acfi.12053
Subject(s) - financial crisis , financial risk , economics , financial system , financial market , business , finance , macroeconomics
We investigate individual investors’ tolerance towards financial risk by focusing on changes associated with the global financial crisis ( GFC ) of 2007–2009. Financial risk tolerance ( FRT ) is analysed longitudinally controlling for demographic, socio‐economic and regional variations. In absolute terms, the change in FRT is small and contrasts with a popular view that risk tolerance is an elastic psychological state overly influenced by the pervading market conditions. Even in the presence of significant financial events, FRT tends to be a reasonably stable attribute in the shorter term but possibly influenced and reshaped by events more gradually over time.