Naslov
Behavioural Biases and Risk Propensity of Croatian Citizens in the Coronavirus Crisis

Autori
Kundid Novokmet, Ana ; Jug, Dora ; Akrap, Petar

Vrsta, podvrsta i kategorija rada
Radovi u zbornicima skupova, cjeloviti rad (in extenso), znanstveni

Izvornik
Proceedings of FEB Zagreb 12th International Odyssey Conference on Economics and Busines / Načinović Braje, Ivana ; Jaković, Božidar ; Ferjanić Hodak, Danijela - Zagreb : Faculty of Economics and Business, University of Zagreb, Zagreb, 2021, 634-660

Skup
12th FEB Zagreb International Odyssey Conference on Economics and Business

Mjesto i datum
Šibenik, Hrvatska; online, 09.06.2021. - 12.06.2021

Vrsta sudjelovanja
Predavanje

Vrsta recenzije
Međunarodna recenzija

Ključne riječi
behavioural finance, personal finance management, risk tolerance, coronavirus crisis, questionnaire survey

Sažetak
Financial decision-making is imperfect and predictably faulty due to various cognitive biases, social interactions and emotions. Multiple choices and the times of uncertainty additionally increase the challenges for a successful financial management, even in case of the financially literate individuals. For this reason, the literature about behavioural finance has flourished since the last global financial crisis, with a bright future in light of the coronavirus pandemic black swan. This paper contributes to the aforementioned field, to be more precise, to the personal finance literature, by investigating the connection between behavioural biases and risk tolerance in the period of an overall economic uncertainty imposed by an outbreak of the COVID-19 health crisis. The research centres on overconfidence and assumes its positive impact on risk acceptance and imprudent financial decisions. The questionnaire survey was conducted on a sample of 130 Croatian citizens in the second half of 2020. Descriptive, univariate and multivariate statistics were employed in the data processing in order to reach answers on the following research questions: 1) How do economic agents’ socio- demographic characteristics shape their risk propensity and financial decision-making?, 2) Is there a connection between risk propensity and financial decision-making?, 3) Is overconfidence positively linked to economic agents’ risk tolerance and imprudent financial decisions?, 4) Do the circumstances imposed by the coronavirus crisis affect the economic agents’ financial decisions? The results reveal that the most of questionnaire respondents have a moderate risk propensity with an increase in the risk averse financial behaviour when taking into consideration the COVID-19 crisis period. Further, males are more prone to the risk-taking than females. Interestingly, the respondents with almost the highest personal income have among the lowest risk tolerance. Although there is some risk tolerance and financial decisions nexus, significant differences in the risk propensity scores are not established, when behavioural aspects serve to classify responses. Via the internal locus of control, relevance of the overconfidence bias for the prudent financial decision-making is demonstrated. Everything considered, the research findings highlight the importance of incorporating the behavioural finance topics in the financial literacy programs. Namely, by raising the financial consumers’ awareness about their predictable errors when reaching financial decisions, the unsustainable debt and predatory finance issues could be diminished. At last, conclusions about the risk-taking behaviour of economic agents in time of the worst economic downturn in the recent history might be quite valuable for the various providers inside the financial-services industry.

Izvorni jezik
Engleski

Znanstvena područja
Ekonomija

POVEZANOST RADA