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Perceived and Realized Risk Tolerance: Changes During the 2008 Financial Crisis

Perceived and Realized Risk Tolerance: Changes During the 2008 Financial Crisis <p>Using the 2007–2009 Survey of Consumer Finances panel data, this study examined changes in perceived and realized risk tolerance after the financial crisis. Households who perceived less risk tolerance were more likely to have reduced their portfolio risk and vice versa. Furthermore, households whose wealth decreased were more likely to perceive less risk tolerance and vice versa. Regression analysis revealed that change in risk tolerance as measured by the change in financial portfolio risk is related to perceived risk tolerance, education, life cycle stage, and employment status. Single households, or those households whose head is less educated, or self-employed or unemployed, may need financial advice to prevent them from reducing their portfolio risk in reaction to a financial crisis.</p> http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Financial Counseling and Planning Springer Publishing

Perceived and Realized Risk Tolerance: Changes During the 2008 Financial Crisis

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Publisher
Springer Publishing
ISSN
1052-3073
eISSN
1947-7910
DOI
10.1891/1052-3073.27.2.265
Publisher site
See Article on Publisher Site

Abstract

<p>Using the 2007–2009 Survey of Consumer Finances panel data, this study examined changes in perceived and realized risk tolerance after the financial crisis. Households who perceived less risk tolerance were more likely to have reduced their portfolio risk and vice versa. Furthermore, households whose wealth decreased were more likely to perceive less risk tolerance and vice versa. Regression analysis revealed that change in risk tolerance as measured by the change in financial portfolio risk is related to perceived risk tolerance, education, life cycle stage, and employment status. Single households, or those households whose head is less educated, or self-employed or unemployed, may need financial advice to prevent them from reducing their portfolio risk in reaction to a financial crisis.</p>

Journal

Journal of Financial Counseling and PlanningSpringer Publishing

Published: Jan 1, 2016

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