The role of financial risk-taking attitude in personal finances and consumer satisfaction: evidence from Australia
International Journal of Bank Marketing
ISSN: 0265-2323
Article publication date: 20 March 2023
Issue publication date: 23 May 2023
Abstract
Purpose
Financial risk-taking attitude (FRT) plays an important role in consumers' financial decisions, thereby determining consumer well-being. Motivated by the recent research on consumer well-being, this paper explores the relationships between financial literacy, a propensity to plan (PTP), FRT, financial satisfaction and life satisfaction.
Design/methodology/approach
The authors use the Household, Income and Labour Dynamics in Australia (HILDA) survey to achieve the purpose of this paper. Furthermore, the authors use the variance-based partial least square structural equation modeling (PLS-SEM), also known as the PLS path modeling approach to test our proposed hypotheses empirically.
Findings
The study finds a strong partial mediation of FRT between financial literacy and financial satisfaction. Moreover, the analyses reveal that a high PTP combined with a high FRT results in achieving high financial satisfaction, which leads to improved life satisfaction.
Practical implications
The findings show the importance of creating financial plans in accordance with risk tolerance. While increasing financial literacy is relevant, the research suggests that tools that help consumers plan and invest in appropriate risky investments will lead to better outcomes.
Originality/value
Though scholarly acumen of consumer well-being is rapidly developing, little remains known regarding the collective roles of financial literacy, PTP and FRT. The study addresses this gap by showing that financial literacy, risk-taking attitudes and planning propensities are all interconnected and necessary ingredients to improve financial and life satisfaction.
Keywords
Acknowledgements
Data acknowledgement: This paper uses unit record data from the Household, Income and Labour Dynamics in Australia (HILDA) Survey. The HILDA Project was initiated and funded by the Australian Government Department of Families, Housing, Community Services and Indigenous Affairs (FaHCSIA) and is managed by the Melbourne Institute of Applied Economic and Social Research (Melbourne Institute). The findings and views reported in this paper, however, are those of the author and should not be attributed to either FaHCSIA or the Melbourne Institute.
The authors thank the editor(s), the associate editor(s) and two anonymous reviewers for their comments on this paper. The authors believe that the comments received have improved the readability and quality of the paper.
Citation
Tahir, M.S., Richards, D.W. and Ahmed, A.D. (2023), "The role of financial risk-taking attitude in personal finances and consumer satisfaction: evidence from Australia", International Journal of Bank Marketing, Vol. 41 No. 4, pp. 787-809. https://doi.org/10.1108/IJBM-09-2022-0431
Publisher
:Emerald Publishing Limited
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