Effects of Personality Trait in Financial Risk Tolerance Investor in Surabaya

Anastasia, Njo and Malelak, Mariana Ing (2019) Effects of Personality Trait in Financial Risk Tolerance Investor in Surabaya. In: The 3rd International Conference Postgraduate School - ICPS 2019, 30-07-2019 - 30-07-2019, Surabaya - Indonesia.

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Abstract

Personality traits are characteristics that frequently surface and describe the behavior of an individual, such as sensation seeking, locus of control, and ambiguity tolerance. The purpose of this study is to test the effects of personality trait towards financial risk tolerance in investors in Surabaya. Data is taken with purposive sampling technique through questionnaire given among the populace in Surabaya. Sample criteria is those who are in the working force, aged 18 to 55 years, and already had an investment for their future according to their risk tolerance. Data processing is done using SEM-PLS to 100 respondents. Study results have determined that sensation seeking and ambiguity tolerance significantly affects financial risk tolerance. Locus of control, however, do not affect investors’ financial risk tolerance in Surabaya. This shows that a heightened stimulation in investors towards risk tolerance encourage them to act boldly on risks. Although, limited and ambiguous information received by investors encourage the acceptance of ambiguity, hence creating a discomfort of uncertainty to the results achieved. Furthermore, the ability of self-control shows no relevance to financial risk tolerance. These condition shows all the more important are studies related to financial behavior, to better understand personality traits of financial actors to avoid making a biased decision.

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