Received: 2019-11-15  |  Accepted: 2020-04-10

Title

Impact of demographic factors on risk tolerance


Abstract

The Financial Services Authority of Indonesia (OJK) survey in 2016 has shown the financial literacy index in Indonesia was only about 21.8%. A lot of illegal investment in Indonesian society in recent years proves that the Indonesian people have not fully understood the benefits and risks of financial decision making. The research describes demographic factor and risk tolerance in the context of Indonesia’s society. The questionnaires distributed online and were obtained 850 respondents. To analyze the role of demographic factors on the willingness to take risks, we use Subjective Risk Tolerance, which is describing the respondent’s perception of risk. The result indicates that gender and age statistically insignificant in describing risk tolerance. Meanwhile, marital status, income, and education significantly important in determining risk tolerance. Gender equality in the working environment means women and men have an equal chance to get job and position in a company. This chance also means that women have a great chance to get more income and wealth than before. Marital status related to responsibility, the greater the responsibility assumes the smaller the level of risk tolerance. The better the knowledge, the better the understanding of the financial decision. Information processed and used to make a better decision. The result shows that in order to conduct an education program and increasing society’s knowledge, Government of the Republic of Indonesia, especially to The Indonesia Stock Exchange and Securities Firm should make attention to demographic factor and fit the investment product with investor’s profile.


Keywords

risk tolerance, risk aversion, demographic factor, Indonesia, capital market


JEL classifications

G11 , G32 , G41


URI

http://jssidoi.org/jssi/papers/papers/view/545


DOI

10.9770/jssi.2020.9.4(18)

Authors

Nosita, Firda
STIE Pancasetia
Articles by this author in: CrossRef |  Google Scholar

Pirzada, Kashan
University Utara Malaysia
Articles by this author in: CrossRef |  Google Scholar

Lestari, Tina
STIE Pancasetia
Articles by this author in: CrossRef |  Google Scholar

Cahyono, Rosadiro
STIE Pancasetia
Articles by this author in: CrossRef |  Google Scholar

Title

Journal of Security and Sustainability Issues


Issue date

2020


ISSN

ISSN 2029-7017 (print)
ISSN 2029-7025 (online)

Cited

Google Scholar

Paper views & downloads

HTML views: 174  |  PDF downloads: 53