CHARACTERIZING FINANCIAL RISK TOLERANCE BY NATIONALITY: A COMPARISON OF THE UNITED STATES AND UGANDA

• Published in: Journal of Business and Behavioral Sciences 2014-07, Vol.26 (2), p.156
• Main Authors: Root, Thomas H, Senteza, Jimmy, White, Toby
• Format: Article
• Language: English
• Subjects: Comparative analysis; Culture; Decision making; Economic development; Expected utility; Gender; Graduate students; Institutional investments; Marital status; Perceptions; Risk management; Securities markets; Studies
• ISSN: 1099-5374; 1946-8113

The impact of individual characteristics on financial risk tolerance has been widely investigated in economies with developed financial markets. It is less well understood if the same relationships hold in economies with developing or less developed financial markets. We utilize established surveys to investigate whether individual characteristics such as gender, investment experience, marital status, and financial confidence impact an individual's financial decision making in the developing sub-Saharan economy of Uganda in a manner similar to those observed in the well-developed markets of the U.S. Overall, our findings indicate Ugandan graduate business students exhibit a higher level of financial risk tolerance than their peers in the United States and that the impact of individual characteristics on risk tolerance does vary by nationality. The results highlight the critical role of national culture in the financial marketplace as well as the need to be mindful of these cross-country disparities in the design and regulation of financial markets and institutions.