Individual Financial Risk Tolerance and the Global Financial Crisis

21 Pages Posted: 11 Mar 2015

See all articles by Paul Gerrans

Paul Gerrans

The University of Western Australia - UWA Business School

Robert W. Faff

University of Queensland

Neil Hartnett

University of Newcastle

Multiple version iconThere are 2 versions of this paper

Date Written: March 2015

Abstract

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.

Keywords: Financial risk tolerance, Risk attitude, Global financial crisis, FinaMetrica

Suggested Citation

Gerrans, Paul and Faff, Robert W. and Hartnett, Neil, Individual Financial Risk Tolerance and the Global Financial Crisis (March 2015). Accounting & Finance, Vol. 55, Issue 1, pp. 165-185, 2015. Available at SSRN: https://ssrn.com/abstract=2576493 or http://dx.doi.org/10.1111/acfi.12053

Paul Gerrans (Contact Author)

The University of Western Australia - UWA Business School ( email )

Crawley, Western Australia 6009
Australia
61 8 64882910 (Phone)

Robert W. Faff

University of Queensland ( email )

St Lucia
Brisbane, Queensland 4072
Australia

Neil Hartnett

University of Newcastle ( email )

University Drive
Department of Accounting & Finance
Callaghan 2308, New South Wales
AUSTRALIA
+61 2 4921 5036 (Phone)
+61 2 4921 6905 (Fax)

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