Influence of personality traits on financial risk tolerance and financial behaviour of smallholder maize farmers in Assin Foso Municipality

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.