The effects of financial literacy on the relationship between personality traits and risk attitude

The purpose of the study is to investigate the possible effects of personality traits and financial literacy levels on individuals' financial risk-taking behavior. The study subjects include 231 participants in order to investigate the relationship between the big five personality traits and financial risk-taking. Simple random sample method was used to obtain the sample in this study. A questionnaire was asked to each participant, which consist of Martinez and John's (1998) Big Five Inventory, and Sjöberg and Engelberg's (2009) economic risk-taking scale and demographic information. Obtained data were analyzed by using Pearson's correlations, and descriptive statistics. SPSS (Statistical Package for the Social Sciences) software was preferred for the purpose of data analysis. Findings from the research shows that higher education levels, married individuals and men have more advanced financial literacy. There is a positive and significant relationship between agreeableness, conscientiousness and openness to experience personality traits and risk taking. Emotional stable individuals are taking more risk than neurotics, and aggreable individuals are taking more risk then its reverse. A higher level of financial literacy in terms of conscientiousness, emotional stableness, extroversion and traditionalism brings about increased risk appetite. The study reveals that financial literacy has significant effects in relationship between personality traits and attitude towards risk.