The Financial Risk Tolerance of Blacks, Hispanics and Whites

12 Pages Posted: 13 May 2005 Last revised: 9 May 2017

See all articles by Rui Yao

Rui Yao

University of Missouri

Michael S. Gutter

University of Wisconsin - Madison - School of Human Ecology

Sherman D. Hanna

Ohio State University (OSU)

Date Written: 2005

Abstract

This article focuses on the effect of race and ethnicity on financial risk tolerance. Blacks and Hispanics are less likely to be willing to take some financial risk but more likely to be willing to take substantial financial risk than Whites, after controlling for the effects of other variables. Risk attitudes may affect investment behavior, so having an appropriate willingness to take financial risk is important in achieving investment goals. Government agencies and financial educators should target investor education on investments and financial risk to racial and ethnic groups in order to promote better choices for investing for financial goals.

Keywords: Financial risk tolerance, Investing, Risk aversion, Race, Ethnicity, Hispanics, Blacks, African-Americans, Preferences, Survey of Consumer

JEL Classification: D14, G11

Suggested Citation

Yao, Rui and Gutter, Michael S. and Hanna, Sherman D., The Financial Risk Tolerance of Blacks, Hispanics and Whites (2005). Financial Counseling and Planning, Vol. 16, No. 1, pp. 51-62, 2005. Available at SSRN: https://ssrn.com/abstract=721046

Rui Yao

University of Missouri ( email )

239B Stanley Hall
Columbia, MO 65211
United States

Michael S. Gutter

University of Wisconsin - Madison - School of Human Ecology ( email )

1225 Observatory Drive
Madison, WI 53706
United States

Sherman D. Hanna (Contact Author)

Ohio State University (OSU) ( email )

1787 Neil Avenue
Campbell 265D
Columbus, OH 43210
United States
614-292-4584 (Phone)

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