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Advances in Decision Sciences (ADS)

Advances in Decision Sciences (ADS)

Published by Asia University, Taiwan; Scientific and Business World

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The Relationship Between Depositor Behaviour and Risk Tolerance in a South African Context

The Relationship Between Depositor Behaviour and Risk Tolerance in a South African Context

Title

The Relationship Between Depositor Behaviour and Risk Tolerance in a South African Context

Authors

  • Suné Ferreira
    (Faculty of Economic and Management Sciences, North West University, South Africa)
  • Zandri Dickason-Koekemoer
    (Faculty of Economic and Management Sciences, North West University, South Africa)

Abstract

The risk tolerance of an individual depositor plays an integral part in a financial decision-making process.Risk perception is furthermore associated with the level of depositor uncertainty, which ultimately leads to
irrational depositor behaviour. The South African banking industry is closely concentrated and dominated
by a few banks, hence, any adverse changes in the banking industry will affect the financial sector
tremendously. It was therefore necessary to test how much risk depositors are willing to tolerate. This paper
made use of hypothetical operational risk events within a bank in order to test how likely depositors will be
to withdraw funds from their bank accounts. Correlation analysis was used to test the relationship between
depositors’ likelihood to withdraw and their risk tolerance levels. An inverse relationship exists between
depositors’ risk tolerance and their willingness to withdraw. Depositors will be less likely to withdraw the
higher their risk tolerance level and more likely to withdraw the lower their risk tolerance level. Older
depositors indicated to be risk adverse while a positive relationship was found between risk tolerance,
income, and education level.

Keywords

Risk tolerance, depositors, behaviour, operational risk, South Africa

Classification-JEL

D81, G21, J10, G32

Pages

36-55

https://doi.org/10.47654/v23y2019i3p36-55

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ISSN 2090-3359 (Print)
ISSN 2090-3367 (Online)

Asia University, Taiwan

Scientific and Business World

4.7
2023CiteScore
 
86th percentile
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SCImago Journal & Country Rank
Q2 in Scopus
CiteScore 2023 = 4.7
CiteScoreTracker 2024 = 8.5
SNIP 2023 = 0.799
SJR Quartile = Q1
SJR 2024 = 0.814
H-Index = 20

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