People are people: A comparative analysis of risk attitudes across Europe

Chris Brooks*, Louis Williams

*Corresponding author for this work

Research output: Contribution to journalArticle (Academic Journal)peer-review

373 Downloads (Pure)

Abstract

In this paper, we conduct a detailed examination of the determinants of atti- tudes to financial risk among retail investors in six European countries (Belgium, France, Germany, Italy, Spain and the United Kingdom). We find that respondents from the United Kingdom and Belgium are the most risk tol- erant while those from Spain are the least. We observe remarkable similarities in the distributions of risk tolerance across countries despite cultural differ- ences and considerable variations in the extent to which risky investing is undertaken as a routine part of financial planning. We further show that coun- try effects in the cross-sectional variation of attitude to risk scores are swamped by the impacts of gender, salary and wealth, while financial knowledge and prior investment experience are much more important still. Our results have implications for regulators and those who wish to encourage European inves- tors to consider going beyond bank savings and guaranteed products to more prevalent stock market investing in an era of negative real interest rates.
Original languageEnglish
JournalInternational Journal of Finance and Economics
Early online date15 Jun 2023
DOIs
Publication statusE-pub ahead of print - 15 Jun 2023

Bibliographical note

Funding Information:
The authors are grateful to Innovate UK and the ESRC for partially funding this research under Knowledge Transfer Partnership grant number 11748. The authors thank Distribution Technology for allowing us to use their attitude to risk questionnaire and Anne‐Florence Allard and Adrian Bell for useful comments and discussions on this topic. The authors also thank three anonymous referees for their suggestions.

Publisher Copyright:
© 2023 The Authors. International Journal of Finance & Economics published by John Wiley & Sons Ltd.

Fingerprint

Dive into the research topics of 'People are people: A comparative analysis of risk attitudes across Europe'. Together they form a unique fingerprint.

Cite this