Abstract:
Assessing the influence of personality traits on smallholder maize farmers’
financial risk tolerance and financial behaviour is vital because agriculture is
capital driven. This research aimed to examine the link between personality
traits and financial risk tolerance of the farmers; examined the relationship
between financial risk tolerance and financial behaviour; assessed the influence
of personality traits on financial behaviour and lastly, examined the link that
exist between the personality traits, financial risk tolerance and financial
behaviour. The study was conducted using the cross-sectional research design.
Primary data was gathered from 320 farmers who were selected using the Multi-
stage sampling technique. The data was collected using a structured interview
schedule. The data was analyzed using descriptive statistics (mean, standard
deviation, frequencies and percentages) and inferential statistics (Endogenous
Switching Regression, Tobit model and the Structural Equation Modeling). It
was revealed in the study that personality traits affect the financial risk tolerance
of farmers. Again, Financial Risk Tolerant Farmers have on average a higher
saving ratio than Financial Risk Intolerant Famers. Also, openness and
emotional stability trait significantly affected farmers’ savings ratio. Lastly,
financial risk tolerance exerts a significant mediation effect on personality traits
and financial behaviour of farmers. Based on findings, it can be concluded that
personality traits and financial risk tolerance affect the financial behaviour of
farmers. The study recommends that, agricultural investment advisors of
financial institutions should take into consideration the financial risk tolerance
levels and personality of farmers when rendering investment advice.
