Discriminants of risk tolerance among Indian investors: a dichotomous discriminant approach Online publication date: Wed, 07-Dec-2022
by Biswajit Prasad Chhatoi; Munmun Mohanty
International Journal of Managerial and Financial Accounting (IJMFA), Vol. 15, No. 1, 2023
Abstract: Financial risk tolerance is dynamic in nature, differs across demographic considerations and depends on time horizon and is considered as the most vital factor of sustainable investment decision. The volatility of FRT poses major challenge for the investment industry in designing a suitable portfolio and advising an investor to invest in it based on the risk-taking ability to fulfil investment objective at micro-level. The existing study emphasises identification of causes of risk discrimination. Data source are primary and cross-sectional in nature, and collected from 552 investors selected from small cities. To assess the FRT classification dichotomous discriminant analysis was referred. The most striking finding of the study is the conforming discriminating factors for male and female. The discriminating factor classifying the males into risk taker or risk avoider was found to be the understanding of risk whereas for the females it was the understanding of returns.
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