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Risk-taking Behaviour in Financial Decision Making: A Village-Level Study

  • Amit K. Bhandari
  • Ashok Kundu
Chapter

Abstract

Approach toward uncertainty plays an important role in almost every economic decision making of a person. This study examines the factors influencing the financial risk-taking behaviour of rural people on financial matters. A total of nine individual and household level factors are identified as determinants of an individual’s attitude toward financial risk, which is investigated by using an experimental survey in some villages of West Bengal, India. Respondents were asked to participate in a lottery experiment, where they may earn more or lose money depending on the results from rolling six-sided dice. Almost all respondents were interested to play the game. Results of the study indicated that individual age, number of earning member and household debt affects negatively on willingness to take risk, while education, income, number of dependents, and number of shocks have positive effect. This empirical research is a valuable input for fund management industry to design financial products and delivery of services for rural markets.

Keywords

Risk Attitude Risk Tolerance Rural People Household Debt Cumulative Probability Distribution Function 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

Notes

Acknowledgments

We are indebted to Prof. S. Fukui and Dr. Nina Takashino for providing conceptual support in designing survey questionnaire.

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Copyright information

© Springer India 2014

Authors and Affiliations

  1. 1.Department of EconomicsR. B. C. Evening College, Institute for the Study of Labor (IZA)West BengalIndia
  2. 2.Department of EconomicsR. B. C. Evening CollegeWest BengalIndia

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