Relationship Between Big-Five Personality Traits, Financial Literacy and Risk Propensity: Evidence from India

Abstract

The purpose of the present study is to empirically examine the effect of Big-Five personality traits on financial literacy and risk propensity. Data were collected from 285 respondents from four cosmopolitan cities in the southern part of India (Chennai, Coimbatore, Tiruchirappalli and Madurai) using a structured instrument. The structural equation modelling results reveal that the following: (a) Big-Five personality traits have a significant and positive influence on financial literacy financial attitude, financial behaviour, financial knowledge and financial decision influences; (b) financial attitude is positively related to risk propensity; and (c) financial decision influences are positively related to risk propensity. The implications for behavioural finance and practicing managers are discussed.

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