Influence of Personality Traits, Financial Risk Tolerance and Investors’ Investment Intention in Nepalese Stock Market

Abstract

The study assesses the influence of personality traits on financial risk tolerance and investment intention of individual investors in the stock market. Moreover, the study engaged the mediating role of risk tolerance in the relations among investors’ personality traits and their investment intention in the Nepalese stock market. The study was conducted through a quantitative research approach. A descriptive and explanatory research design was used in this study. The results confirmed that there is no influence of personality traits on investment intention of individual investors of Kathmandu Valley. However, the findings revealed that some of the personality traits have some impact on an individual’s risk-tolerance behaviour. Thus, indicating that extraversion, conscientiousness and openness to experience have the most significant influence on financial risk tolerance. The results also revealed no mediating effect of financial risk tolerance between personality traits and investment intention of individual investors in the stock market. The study concluded that the big five personality traits have little influence on individual investors' stock market intention, while other factors, such as financial knowledge, economic circumstances, and demography, can be important in the context of Nepal. Although financial risk tolerance does not mediate the relationship between personality characteristics and investment intentions, factors such as financial literacy may operate as mediators. Understanding these linkages can assist investment experts in leading investors based on their characteristics and risk tolerance, intending to maximise returns and create long-term wealth.