FINANCIAL LITERACY, DEMOGRAPHIC DIFFERENCES AND FINANCIAL RISK TOLERANCE LEVEL: A CASE STUDY

Abstract

Abstract. This study examines the effect of the level of financial literacy on the level of tolerance for risk and to determine the role of several demographic variables, such as age, gender, income level, marital status in moderating the influence of financial literacy levels on risk tolerance levels. The data collected using a questionnaire. Questionnaires are available online (in the network) and are also distributed questionnaires offline (outside the network) to 200 individual potential investors. The results of this study indicate that the level of personal literacy does not affect the level of tolerance to risk. These empirical findings indicate that other factors determine the level of individual risk tolerance, in addition to the level of financial literacy given that investment decision making is a complex decision determined by a combination of several factors. Demographic factors are one of the factors that determine investment decision making. The next finding supports this because age has a significant influence on the level of tolerance to risk. Besides that, income and gender (Men) also have a significant influence on the level of tolerance to risk. Subsequent findings failed to prove the role of demographic factors in clarifying the benefits of financial literacy levels on risk tolerance levels.