Demographic Determinants of Financial Risk Tolerance: An Empirical Study among Academicians in Surat City

Abstract

Financial risk tolerance (FRT) is a critical factor in investment decision-making, influencing portfolio allocation and financial planning. This study empirically examines the FRT levels among academicians in Surat city, analyzing demographic variables such as gender, age, marital status, education, income, and employment status. Utilizing a structured questionnaire, data from 300 respondents were collected and analyzed using statistical methods, including chi-square tests, factor analysis, and clustering techniques. The results reveal that demographic factors significantly impact financial risk tolerance. Men exhibit higher risk tolerance than women, younger individuals tend to take greater financial risks, and single individuals demonstrate a higher propensity for risk-taking. Higher education and income levels are positively associated with increased risk tolerance, emphasizing the role of financial literacy and economic stability. Employment status also plays a role, with self-employed individuals showing greater risk-taking behavior compared to salaried employees.

The findings of this study have practical implications for financial advisors, policymakers, and investors. Tailored investment strategies and financial literacy programs can be designed based on demographic profiles to enhance informed decision-making. However, the study is limited by its geographical focus on Surat city, reliance on self-reported data, and the exclusion of psychological and macroeconomic factors. Future research should explore these aspects in broader and more diverse populations to gain deeper insights into financial risk tolerance.