Impact of Big Five Personality Traits on Risk Tolerance

Abstract

Purpose – The aim of this paper is to examine the connection among Investors' personality & risk-taking. With the Big Five Factor Inventory the personality traits of openness to experience, neuroticism, agreeableness, extraversion, & conscientiousness were measured.

Design/methodology/approach – The study employed non-probabilistic sampling method of convenience sampling. Primary & secondary sources were gathered for the research project. Using a standardized questionnaire, primary data was collected from salaried investors engaged in the public & commercial sectors (the respondents). The questionnaires were initially served to 350 individuals, but after adjusting for incomplete and invalid questionnaires, the final sample size came to 296. The data analysis has been done using SPSS software. The sample was gathered in Delhi, India, between January & December of 2021.

Findings – The findings demonstrated that investors' risk tolerances were influenced by their personality attributes. Participants in the study have low financial risk tolerances. An investor who is an extrovert, neurotic and open person is more likely to presume risk.

Originality/value – The present study is exclusive in the sense that it seeks to evaluate the relationship among Personality traits, demographics & Risk taking, especially in context of Indian investors. Thus, this study will significantly add to the knowledge of investor behaviour in countries & assist policymakers and investment bankers in formulating appropriate financial advice recommendations.