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Propensity toward financial risk tolerance: an analysis using behavioural factors

Mahfuzur Rahman (Department of Finance and Banking, Faculty of Business and Accountancy, University of Malaya, Kuala Lumpur, Malaysia)

Review of Behavioral Finance

ISSN: 1940-5979

Article publication date: 21 August 2019

Issue publication date: 23 June 2020



The purpose of this paper is to investigate the influence of six core behavioural factors on financial risk tolerance (FRT). The study also analyses the role of religiosity in the relationship between behavioural factors and FRT.


Empirical data were collected using a survey questionnaire. A total of 1,679 questionnaires were distributed to six public universities in the Klang Valley. However, only 1,204 questionnaires were completed and used for analysis. This study employs structural equation modelling to validate and assess proposed research model.


The results of the analysis demonstrated some new findings. The findings indicate that propensity for regret, propensity for trust, happiness in life, propensity to attribute success to luck and propensity for overconfidence have a significant influence on FRT while propensity for social interaction does not. The results also provide support for the moderating effects of religiosity in the proposed research model.


The findings highlight the important role of behavioural determinants to assess individuals’ FRT. Understanding FRT is a complex process that goes beyond the exclusive use of behavioural factors. Thus, more research is clearly needed to resolve which additional factors can be used by financial advisors to increase the explained variance in FRT differences.



The author thanks the Bright Spark Unit University of Malaya for their financial support.


Rahman, M. (2020), "Propensity toward financial risk tolerance: an analysis using behavioural factors", Review of Behavioral Finance, Vol. 12 No. 3, pp. 259-281.



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