Financial Risk Tolerance: The Case of Older Chinese in Klang Valley, Malaysia 2020

Abstract

Ageing demographic profiles pose challenges to the nation as policymakers are concerned about the health, public pension and the financial management of the society. In Malaysia, retirees are mostly dependent on savings from the Employees Provident Fund (EPF), a government agency that manages savings and retirement plans for private-sector employees and non-pensionable public servants. Many Malaysians aged past the targeted retirement age of 60 years old chose to remain in the workforce, mainly due to insufficient retirement funds or has depleted their retirement funds in a short period. To ensure sufficient funds to attain an ideal retirement life, Malaysians resort to invest or seek business opportunities. Thus, this paper studies the impact of demographic characteristics (sex, age, and educational level) and finance characteristics (financial knowledge and financial satisfaction) on the risk tolerance among older Malaysian Chinese in the year 2020. The results of this study showed that the older Malaysian Chinese risk tolerance is highly influenced by sex, age, education level, financial knowledge and financial satisfaction.

Financial Risk Tolerance During Post-Pandemic: A Case Study Among Urban Older Malaysians

“…As seen in Figure 1 below, elderly financial satisfaction does not significantly affect their financial risk tolerance; the first hypothesis (H1) is not supported (FS-RT: 0.044 and p-value more than 5% level). This finding differs from previous studies, such as Chong et al (2021) focused on the Malaysian Chinese in Klang Valley and discovered that financial satisfaction and risk tolerance are positively related. Besides, Rajesh (2018) on Indian households' financial literacy also encountered a negative relationship between economic satisfaction and risk tolerance.…”

“…As mentioned earlier, in hypothesis 1, financial satisfaction has no significant direct association with financial risk tolerance.This study adopts Process macro for SPSS version 4.0 and Model 4 (mediation analysis) to analyse the direct and indirect effects (mediated by the TPB) between financial satisfaction and financial risk tolerance among Malaysian elderly in Klang Valley, Malaysia. This paper extends the previous literature ofChong et al (2021) by including Malaysian elderly of Chinese, Malay and Indian ethnicity. The results from this study have revealed that financial satisfaction does not significantly influence the elderly financial risk tolerance, which is inconsistent with the previous studies conducted before…”

“…Generally, during the COVID-19 pandemic, most listed companies need to perform better or get lost due to MCO implementation. As a result, the investment strategies, i.e., choosing records of earnings growth and avoiding investing in companies with (Chong et al, 2021;Rajesh, 2018). This result suggests that the national lockdown during COVID-19 has resulted in a poor economy and financial difficulty among most Malaysians.…”

“…Chong et al (2021), which only focuses on the Chinese elderly located in Klang Valley, Malaysia, this study expands the sample to include elderly of different ethnicity, namely Malay, Chinese, and Indian to identify the relationship between financial satisfaction and the financial risk tolerance of the elderly during COVID-19 by adopting the TPB. Hence, this study intends to address the following problem: i.…”

“…Tolerance) -Adapted fromChong et al (2021) FS (Financial Satisfaction) -Adapted fromChong et al (2014) ATT (Attitude) -Adapted fromRaut et al (2018),Sondari and Sudarsono (2015) SN (Subjective Norms) -Adapted fromRaut et al (2018),Sondari and Sudarsono (2015) PBC (Perceived Behavioural Control) -Adapted fromRaut et al (2018) …”