Factors Affecting Financial Risk Tolerance of Rural Households in Ludhiana District of Punjab

The present study aims to find out the financial risk tolerance scores of the rural residents of Ludhiana district. Also, how drivers such as socio-demographic factors, namely, gender, age, education, annual income, existence of loan, occupation, employment status and psychological factors, namely, deliberative thinking, optimism and personality type A/ B impact financial risk tolerance of rural residents. The study is important for financial policy makers as they will become aware about scenario of rural residents and frame policies accordingly. Stepwise regression analysis was carried on. The result was found out that optimism positively and deliberative thinking negatively impacted financial risk tolerance, but personality type A/B did not have a significant impact on financial risk tolerance. Socio-demographic factors such as existence of loan, full-time salaried individuals, marital status significantly impacted financial risk tolerance. Other factors failed to have impact on financial risk tolerance of rural residents in the current study.