Are Financial Decision Led by Personality Type and Moderated by Motivation

Abstract

This research adds value incomprehension of individual's personality and its effects on financial decisions. Data was collected through questionnaires from 346 individuals from different areas of Pakistan. The purpose of this paper is to investigate the relationship between personality traits and financial decisions and moderating role of motivation among individuals in different areas of Pakistan. The study provides valuable insights to investment experts and policymakers to understand investors' behavior. A quantitative research method is used to measure personality traits, motivation and financial decisions of the respondents. A survey was conducted among the students and. teachers of a business school, investors and all the individuals who are making financial decisions. Software packages SPSS, AMOS & Hayes (2013) PROCESS macro were used to analyze the data. The findings revealed that personality traits have some impact on an individual's risk-tolerance behavior, which, in turn, influences investment decisions about stock, securities and bonds. The results of this study is a positive relationship between extroversion, openness to experience and financial decisions. While a negative relationship exists between agreeableness, neuroticism, conscientiousness and financial decisions. The results from macro Hayes also supported the moderating role of motivation between personality types and financial decision. Motivation strengthens the relationship between extroversion, conscientiousness, openness to experience and financial decision while weakens the relationship between neuroticism, agreeableness, and financial decision. Therefore, this study will contribute significantly towards the understanding of individual's behavior while making financial decisions and will help policymakers and investment bankers to make appropriate suggestions on financial advising