Individual Investors Financial Risk Tolerance and Personality Traits. A Systematic Review and Future Research Direction
Authors: Mukhtar Shakira , Jan Anisa 
Published: December 2023

Purpose: Using a systematic literature review the papers investigated the relationship between various personality traits and the volatility of financial risk tolerance levels of investors. Further, the study analyzed and foundational work that has gone into making behavioural finance a well-established and distinct field of study over the years. The behavioural tendencies of individual investors, institutional investors, and financial advisors have also been included in this study. Design/Methodology/Approach: The research papers were assessed using the Scopus database, published journals, conference proceedings, and working papers, using keywords related to behavioural finance. These papers were gathered from 1967 which laid the groundwork for this subject to 2021. These articles are divided into categories according to personality traits, year, country, and author. All research instruments connected to primary and secondary data that writers have utilized have been shown in this paper Findings: The findings of this study suggest that research on financial markets has been overtaken by a new era of studying human emotions, behaviour, and attitudes. Moreover, not only are academics paying attention to this field, but so are corporations, financial intermediaries, and entrepreneurs. Individual and institutional investors, as well as financial advisors, are the primary focus of the research, but the behaviour of the financial intermediary through which most of these investors invest should also be examined. It allows researchers to focus on a smaller subset of the population while also examining emerging economies in search of new theories. The findings of this study have been described in the form of tables, which include the big five personality trait model and their impact on risk tolerance levels among investors. Research Limitations/Implications: Based on recent research, this study provides an overview of the most significant developments in this field. So far, there have been only a few comprehensive reviews of behavioural finance studies have been published. Now researchers in this field will benefit from this study's findings, as well as those who are looking for areas to focus their efforts. The use of only the Scopus database is the limitation of this study, the use of the web of science could have provided much more details. Practical implications: A practical implication of the research is that corporations, policymakers, and securities issuers can keep investors' interests in mind before introducing security s into the market. Social Implications: Investors can get well acquainted with their personality type and risk tolerance level which will help them in making better investment decisions and thereby reduce risk. Originality/Value: The focus of this work is the review of existing research on the big five personality trait model about the risk tolerance level of investors. The research is also based on investment decision-making literature. Some new concepts and theories of behavioural finance will be discussed in this paper in addition to the more established ones. Consequently, the study encourages readers to look for solutions that limit the impact of personality traits on risk tolerance and thereby in making decisions.