Financial knowledge based on financial risk taking : the effects of financial literacy on risk tolerance

Abstract

As, Financial Knowledge based on Financial Risk Taking: The effects of financial literacy on risk tolerance has been concerned, the objectives of this study are to compare levels of perceived risk and levels of financial literacy between two groups which are one who are likely to be good at financial literacy and one who do not and to analyze these linear relationships. This study is a survey research which the research methodology is mixed method. The qualitative data were collected from in-dept interview questionnaire, while the quantitative data were also collected from online survey questionnaire. The population is students who enrolled in Bachelor of Business Administration in two main groups which are one who do and do not have financial literacy. The sample is students who enrolled in Department of Finance which represent one who have financial literacy, and students who enrolled in Department of Information Technology which represent one who do not have financial literacy. The selection method of the sample is a purposive sampling method which surveyed fundamental financial knowledge, financial behavior and perceived risk. The survey method used online survey and constructed in-depth interview. The sample were divided into three groups according to their perceived risks which are risk lovers, risk neutral, and risk averse. The hypothesis of this study is that there are differences between financial knowledge between sample who assessed their perceived risk themselves and who did them using a survey assessment. The results can be concluded that the population mean between two independent samples is statistically significant at level of 0.10 significance, and the population mean between two groups of different methods of perceived risks is statistically significant of differences between those two means at 0.01 significance. Moreover, the linear relationship which is correlation of financial literacy and perceived risk self-assessment is 0.175 (0.013), while one which is of financial literacy and perceived risk assessed by a survey is 0.160 (0.023). Thus, these hypotheses are statistically significant. The suggestions are 1)financial curriculum should take a course of risk and risk management 2)investors who do not have good in financial knowledge should concern more about their investment including risk 3) investment consultant should assess the risk and perceived risk of consultee and let them know about the risks before making a investment decision 4)government should promote financial knowledge of financial planning, cash management, and investment allocation and risk diversification.