Developing a test for financial profiling

: demographic factors and degree of financial literacy influencing individual financial risk tolerance

Abstract

In "Developing a Test for Financial Profiling: Understanding the Influence of Demographic Factors and Financial Literacy, on Individual Financial Risk Tolerance" by Sophie Malischewsky the focus is on creating a financial profile test that assesses an individual’s financial risk tolerance, integrating other elements such as demographic factors and financial knowledge. The research builds on existing studies showing financial risk tolerance is complex and related to various demographics and financial literacy. The study highlights a common discrepancy between people's perceived financial knowledge and their actual understanding. That's why the study measures financial literacy by combining self-assessment with a series of questions on diverse financial topics. Financial risk tolerance is measured through a questionnaire designed to explore various aspects of this trait. Through a cluster analysis individuals are categorized into different profiles based on their responses. In contrast, to what previous studies have suggested, marital status and having children were found to have no impact in this context. The study ultimately distinguishes individuals into six risk tolerance clusters in combination with financial literacy, health status, marital status, presence of children and occupation.

Date of Award	22 Jan 2024
Original language	English
Awarding Institution	Universidade Católica Portuguesa
Supervisor	Rute Xavier (Supervisor)