Determinants of the Risk Tolerance of the Vietnamese Individual Investors

Abstract

The risk tolerance of investors is an important factor because it can explain why an investor accepts or not a project. In other words, the risk tolerance towards a project describes the investors' attitude, knowledge, experience, expectation, etc. Vietnam is a developing country, it is splendid for national or foreign investors when investing in projects in Vietnam. However, it is necessary to find out about the Vietnamnese investors and economic environment. Therefore, this research was carried out. It not only determines the factors affecting the risk tolerance of the Vietnamese individual investors in previous models but also investigates the new factors (Investment background knowledge and Family tradition). By using EFA (Exploratory Factor Analysis) method, the result presents that the risk tolerance of the Vietnamese individual investors is affected by 3 elements (Investment background knowledge, Education and Wealth), the factor with the most powerful affection is Investment background knowledge. In addition, the Vietnam Government should create suitable policies to encourage investing.