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The impact of financial literacy and financial interest on risk tolerance
Stockholm University, Faculty of Social Sciences, Stockholm Business School.
Number of Authors: 22021 (English)In: Journal of Behavioral and Experimental Finance, ISSN 2214-6350, E-ISSN 2214-6369, Vol. 29, article id 100450Article in journal (Refereed) Published
Abstract [en]

We investigate and compare the effects of financial literacy and financial interest on risk tolerance, evaluating not only at the means, but also the whole distribution. We use a unique sample of 12,156 Swedish bank customers combining bank-register data with survey data. Results show that both financial literacy and financial interest are associated with higher risk tolerance. They further show that the impact of financial interest is significantly higher than the impact of financial literacy. Differences are also observed across the distribution. Quantile regressions show that financial interest has its greatest association at the medium-to-high range of risk tolerance, whereas financial literacy shows its greatest association at the lower range of risk tolerance. Findings contribute to the literature on risk tolerance, specifically pointing to the relevance of the noncognitive trait; interest, to individuals’ risk tolerance.

Place, publisher, year, edition, pages
2021. Vol. 29, article id 100450
Keywords [en]
Financial-risk tolerance, Financial literacy, Financial interest
National Category
Economics and Business
Identifiers
URN: urn:nbn:se:su:diva-193805DOI: 10.1016/j.jbef.2020.100450ISI: 000632618200023OAI: oai:DiVA.org:su-193805DiVA, id: diva2:1562150
Available from: 2021-06-08 Created: 2021-06-08 Last updated: 2022-02-25Bibliographically approved

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Jonsson, Sara

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