The Perception and Knowledge of Financial Risk of the Portuguese

Abstract

This study will help academics, researchers, and professionals to better understand how the Portuguese population perceives financial risk. Thus, the main objective of this study is to analyse and compare the perception and knowledge of financial risk by the Portuguese. The methodology used is quantitative, and the measurement instrument consists of three parts: financial risk perception, financial risk knowledge and sociodemographic characterization of the participants. The sample is composed of 830 Portuguese individuals, over 18 years old. The results demonstrate that financial risk perception is a one-dimensional measurement and that there are low levels of both perception and knowledge of financial risk. It can also be concluded that the Portuguese individuals have a higher level of financial risk perception, when compared to financial risk knowledge, and it is men who have higher levels of perception and knowledge of financial risk. Thus, this study contributes to the literature on financial risk by presenting empirical evidence and relevant conclusions, and it is therefore expected that it will help to improve the perception and knowledge of the financial risk of the Portuguese and, consequently, their financial decisions and financial well-being. Therefore, the study fills a gap, since there are no studies in Portugal that assess the perception and knowledge of financial risk of the Portuguese.

Evaluating Coaching Intervention for Financial Risk Perception and Credit Risk Management in a Nigerian Sample

“…A variety of demographic information was collected in this study about traders, including their gender, marital status, age, level of education, and years as traders. The Traders’ Financial Risk Perception Questionnaire (TFRPQ) was adapted from previous literature and used as one of the primary instruments of data collection ( Nguyen et al, 2019 ; Tavares et al, 2020 ). With a 5-point Likert scale [strongly agree (1) to strongly disagree (5)], the TFRPQ measures traders’ feelings about financial risks using five items.…”

“…Financial risk perception refers to the way a person think, feel, and evaluates the risk factors of an ongoing or potential business venture ( Nguyen et al, 2019 ). Often, financial risk perception studies employ psychometric scaling techniques in order to generate quantitative data about how people think about risk and benefit (e.g., Diacon and Ennew, 2001 ; Nguyen et al, 2019 ; Tavares et al, 2020 ). Credit risk is a term that describes the likelihood of loss due to the failure to comply with the terms of a financial contract ( Brock, 2021 ; Corporate Finance Institute, 2022 ; SAS Institute, 2022 ).…”

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“…The findings reveal the positive and significant moderating effect between the level of individual incomes and risk perceptions. When individuals have high income, they intend to invest more according to their financial knowledge to accumulate longterm wealth and welfare (Tavares et al, 2020). Zhang and Posso (2019) also pointed out that people with low household incomes have a higher acceptance of inclusive finance tools.…”

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“…Conversely, people with a greater stock of financial risk tolerance are associated with engaging in more financially sustainable behavior by investing into riskier assets, such as equities and equities-based mutual funds, which results in greater wealth accumulation and sustainable retirement savings over time [5]. Overall, risk tolerance plays a significant role in maintaining the financial sustainability of households over time [6].…”