Effect of Sociodemographic Factors and Multidimensional of Risk Toward Financial Risk Tolerance and Risk Tolerance Assessment Using Data Envelopment Analysis of Indonesian Investors

Irna Puji Lestari
Ministry Religious Affairs of Indonesia, Jakarta Regional Office, Indonesia
DOI – http://doi.org/10.37502/IJSMR.2021.4407

Abstract

Understanding individual risk tolerance before making an investment decision is very important. The different characteristics of investors result in different levels of risk tolerance, hence considering investor’s sociodemographic factors is very important in assessing individual risk tolerance. This study aims to investigate factors affecting financial risk tolerance such as sociodemographic factors and multidimensional risk. This study was conducted on 438 Indonesian investors through an online survey. The results showed that sociodemographic factors such as age, gender, marital status, education, and income had an effect on financial risk tolerance, whereas ethnics do not have an effect on financial risk tolerance. This study also finding that multidimensional risk had an effect on risk tolerance and be a potential mediator between sociodemographic factors and financial risk tolerance. This study also considers Data Envelopment Analysis (DEA) to assess investor risk profile. DEA scores show that most Indonesian investors tend to have less risk tolerance.

Keywords: Risk Tolerance, Risk Attitude, Risk Capacity, Sociodemographic Factors, Multidimensional of risk, Data Envelopment Analysis.

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Works Cited

Irna Puji Lestari. (2021). Effect of Sociodemographic Factors and Multidimensional of Risk Toward Financial Risk Tolerance and Risk Tolerance Assessment Using Data Envelopment Analysis of Indonesian Investors. International Journal of Scientific and Management Research, 04(04), 79-105. doi:http://doi.org/10.37502/IJSMR.2021.4407

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