The factors affecting financial risk tolerance of investors in Turkey according to A/B personality traits in times of COVID-19 pandemic

Global markets have been exposed to many systemic and non-systemic risks throughout the history. Although the Covid-19 Pandemic is one of the biggest systemic shocks the world has seen in the last century, the effects of this systemic shock on individual investors are subjects that have not been adequately researched in terms of quality and quantity. Identifying the underlying causes of the change in investors' risk aversion behaviors and financial choices in the face of systemic shocks, encouraging them to re-invest by offering alternative investment options in the context of these factors, is important for the sustainability of the economic recovery and to remain more robust to future shocks. The aim of this study is to obtain information and foresight about the factors that affect the Financial Risk Tolerance and financial preferences of individual portfolio investors in developing countries with high economic fragility when a systemic shock comes to the global financial markets such as the Covid-19 Pandemic. In this context, data were collected from 761 individual portfolio investors who invested in stocks traded in Borsa Istanbul (BIST) based on the example of Turkey. In order to test the accuracy of the hypotheses formed within the scope of the research, Independent Samples t-Tests and One-Way ANOVA Tests were applied and Logistic Regression Analysis was performed in order to estimate and model the factors affecting investors' Financial Risk Tolerance. As a result of the research, it was determined that the Financial Risk Tolerance of individual portfolio investors in Turkey increased during the Pandemic period. It has been determined that there is no significant difference between investors' self-diagnosis of Covid-19, Type A/Type B personality traits and Financial Risk Tolerance. On the other hand, investors with Type A personality traits diagnosed with Covid-19 take more speculative risks than investors without Covid-19 diagnosis, investors with Type A personality traits review their portfolios more frequently than investors with Type B personality traits, and those aged 40 and over. It was found that investors with Type A personality invest higher amounts to their investments compared to investors under the age of 40. The results of the Logistic Regression Analysis showed that the demographic, socio-economic characteristics and personality traits were not explanatory in estimating the Financial Risk Tolerances in times of Covid-19 Pandemic. On the other hand, the results showed that some of the financial preferences of investors and their exposure to Covid-19 are partially explanatory. It is considered that the research will benefit investment advisors, portfolio managers and brokerage houses in terms of predicting investor behavior in possible future global shocks and in this context, offering them refined investment options that are compatible with their risk tolerance.