Attitudes towards Financial Risks and Portfolio Allocations: Evidence from Large-Scale Surveys

This paper analyses the determinants of financial risk attitudes and portfolio allocations as established by large-scale surveys in developed countries. After a literature review the paper proceeds with an analysis of two large-scale surveys on financial risk attitudes and the ownership of financial products in Slovakia. Risk attitudes are examined via a stated and revealed preference over portfolio allocations. Two dependent variables were used to test assumptions on investment choices: subjective financial risk tolerance (expressed via stated preferences over hypothetical portfolios) and objective risk tolerance (expressed via the actual share of risky investments out of the total financial assets). The standardised regression coefficients indicated that the risk attitudes seemed to be the most important predictors of both subjective and objective risk tolerance, followed by perceived and actual experience with financial investments. Sociodemographic variables (gender, age, education) had a relatively lower impact on portfolio allocations.