The Relationship between Risk Propensity, Risk Perception and Risk-Taking Behaviour in an Emerging Market
Keywords:risk propensity, risk perception, risk-taking behaviour, empirical study
AbstractThis paper reports evidence to support a relationship between risk propensity, risk perception, and risk-taking behaviour of investors in an emerging market. Primary data were gathered using a validated structured questionnaire, which was self-administered by respondents: there were 162 investors from 8 stockbroking companies. A multiple regression was used to test the direct and indirect effects of the identified behavioural characteristics on investment decision. Risk propensity was found to be positively related to risk-taking behaviour whereas risk perception was negatively related to risk-taking behaviour. It was further found that risk perception partially mediates the effect of propensity to take risk. This suggests that the perceptual framing of a situational context in the investorsâ€™ thought processes reduces but it does not totally overwhelm the innate personality traits with respect to either the investorâ€™s risk-seeking or risk-averseness. The tendency to engage in risky behaviour is more psychological in nature. The implications of the research are further explored.
How to Cite
Sahul Hamid, F., Rangel, G. J., M. Taib, F., & Thurasamy, R. (2013). The Relationship between Risk Propensity, Risk Perception and Risk-Taking Behaviour in an Emerging Market. International Journal of Banking and Finance, 10(1), 134–146. Retrieved from https://e-journal.uum.edu.my/index.php/ijbf/article/view/8471