Influence of Risk Aversion and Personality Trait on Choice of Investments in Sri Lankan Context

This study was aimed at identifying the level of risk aversion among individual investors in Sri Lanka and the influence of risk aversion and personality trait on choice of investments in Sri Lanka. This study followed the survey strategy and data was collected using a web questionnaire from 341 subjects and SPSS software was used to analyse the data. The reliability, validity, factor analysis and correlation analysis were followed by multiple regression analysis to test the hypotheses of the research. The key findings of the study were that the respondents have a high-risk aversion level, depict personality trait type A behaviour, the existence of a significant impact of risk aversion on the investment choice and the existence of a significant impact of personality trait on the investment choice. The study provides important implications for investors, educators and financial intermediaries to improve the behavioural and psychological traits of Sri Lankan investors, to help them make conscious financial decisions, leading to diverse investment choices. The novel contribution towards the existing empirical research in local context was that this study considered all types of individual investors, and also investigated the level of risk aversion of individual investors in Sri Lanka