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Purpose: This study aims to analyze how risk tolerance of Indonesian retail investors is based on sociodemographic characteristics and also related to the multidimensional risk Due to the different characteristics of investors turn out to become different levels of risk tolerance for each individual investor, hence considering investor's sociodemographic factors is very important in assessing risk tolerance. Methodology: This study used quantitative analysis. The random sampling was obtained from the sample cohorts, which consist of the Indonesian retail investor club. Data was collected through an online survey and gathered 407 respondents. Then, the data was analyzed by using PLS with Smart-PLS 3.0 software. Result: Our findings showed that the most of socio-demographic variables such as age, gender, marital status, education, and income affected the financial risk tolerance, whereas ethics do not affect financial risk tolerance. And risk capacity partially mediated socio-demographics on financial risk tolerance. Application: The investor and financial advisers would use this analysis in assessing risk tolerance and determining the best type of investment and best suits the risk preference of investors. Novelty: To the best our knowledge, this study is pretty scarce. Not like the previous studies, this research also use an advanced method which explores variables interdependency. This research is the first one in Indonesia, which compiles socio-demographic variables. And also it is an enriched empirical and literature manner. |
