Examining the relationship between risk perception and financial literacy level, demographic and socio-economic characteristics: A research in Adana

According to classical finance theorists, individuals act rationally in making investment decisions. Accordingly, the classical finance theorists ignore the human characteristics to investment decisions and an investor prefers the most reasonable investment alternative in a rational way. The classical finance theory, especially based on the expected utility theory, emphasizes that the expected benefit should be maximized by the risk factor at the same level. Contrary to the classical approach, behavioral financiers emphasize that investors do not always make a rational decision. In addition, they argue that the expected level of return on investment and the level of risk can be tolerated are very different from each other and they emphasize that individuals show irrational tendencies in the process of making investment decisions under the influence of cognitive and psychological prejudices. Through these informations in the literature, this study aims to examine which demographic and socio-economic factors are associated with investors risk perceptions and also the relationship between financial literacy and risk perception. The sample consists of 209 individuals from different ages and occupational groups living in Adana who participated in the study. For the purpose of the research, the Financial Literacy Scale developed by Gerek and Kurt (2010, 2011) and the Risk Tolerance Scale developed by Grable and Lytton (1999) were applied to the participants in the sample by using digital media via Google Forms. Besides, demographic and socioeconomic information was asked in the same forms. Frequency, Independent T-Test, One-Way ANOVA, and Pearson Correlation analyzes were performed using statistical programs in order to test the data collected in the research in accordance with the goals of the thesis. With this research, it was concluded that there is a significant differentiation relationship between the risk perception and financial literacy level of individuals living in Adana. The risk tolerance of women is lower than men, and there is a significant differentiation relationship between the number of family members and risk perception.