Evidences of investors’ risk tolerance in Nairobi securities exchange: Does education or specialization matter?

The main objective of the study is to evaluate the extent to which investors’ education level or specialization in finance or accounting determines investor risk tolerance at the Nairobi Securities Exchange using a total of 500 individual investors out of 9,32,510  investors holding CDS accounts. Data is collected through questionnaires comprising 13-item risk tolerance instrument and demographic attributes that determine individual investors’ risk tolerance. Analytical framework included ordinal logistic regression model, as well as an analysis of variance and Wolfowitz Wald test at α=0.05. The key findings are that investor education level are significant in the determination of risk tolerance only at below the high school level with a positive impact of 1.831 log of odd for every unit increase in risk tolerance. Specialization in finance or accounting discipline also influenced investor risk tolerance at a significance level of 0.022 with a negative impact of -0.389.