Changes in financial risk tolerance, 1983–2001

By Rui Yao, Sherman D. Hanna, S. Lindamood. Financial Services Review, 2004

144 citations recorded by the source corpus.

Using six Survey of Consumer Finances cross-sectional datasets representing the years 1983 through 2001, this study investigates changes in financial risk tolerance levels over time. Logit analyses are performed to test changes in risk tolerance, controlling for respondent and household characteristics. Willingness to take some risk fell from 1983 to 1989, did not change from 1989 to 1992, increased in 1995, increased again in 1998, then decreased in 2001. Financial risk tolerance tends to increase when stock returns increase and decrease when stock returns decrease. This relationship could lead to buying when prices are high and selling when prices are low. Financial education is needed to help investors overcome the bias of overweighting recent events.

Subfields: Accounting, Economics and Econometrics, Finance

View Paper: https://www.semanticscholar.org/paper/f3641b1d5afa6d161142e1df22cc528e05909465

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In Accounting

1. Huigang Liang
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Citations in the corpus

• An Empirical Investigation for Determining of the Relation Between Personal Financial Risk Tolerance and Demographic Characteristic (2010, background): “When demographic and economic factors related to investor change, the investor’s position on the risk-reward spectrum will also change (Bertaut, 1998: 263; Grable et al., 2006: 72; Yao et al., 2004: 249).”
• Decomposing the Age Effect on Risk Tolerance (2011, unknown): “Most prior research shows that risk tolerance decreases with age (Grable and Lytton, 1998; Morin and Suarez, 1983; Yao et al., 2004, 2005).”
• Avoidance of Information Technology Threats: A Theoretical Perspective (2009, background): “Due to the ubiquity of risk in financial decisions, many studies are focused on risk tolerance and find that risk tolerance is positively related to risky financial behaviors (Grable et al. 2006; Hallahan et al. 2004; Yao et al. 2004).”
• A Longitudinal Study of Financial Risk Tolerance (2012, unknown): “1996a; Xiao, Alhabeeb, Hong & Haynes, 2000 and Yao, Hanna & Lindamood, 2004 ).”