International Conference on Economics, Finance & Business, Rome

RISK ATTITUDES OF INVESTORS IN CRYPTOCURRENCY & TRADITIONAL ASSET MARKETS: A COMPARATIVE ANALYSIS

GÜLIN VARDAR, LALE BAZ

Abstract:

The existing studies indicate an influence of the investors’ risk attitude on their investment decision-making process. While previous research has explored this relationship in the traditional asset market, there is a paucity of studies addressing cryptocurrency. This study explores the similarities and differences, along with the interdependence of risk desire, risk perception, and risk behavior in both markets. To understand how the risk attitude differs between the cryptocurrency market and the traditional asset market, risk perception and risk preference exert the risk behavior in the cryptocurrency market compared to the traditional asset market differently and the demographic factors have a different impact on the risk attitude in the cryptocurrency market and traditional asset market, an online survey was created where participants were asked to answer a set of questions about their risk preference, risk perception and risk behavior and different analysis procedures, such as one-way ANOVA test, V-contingency coefficient, Tukey-Kramer post-hoc test, Leven's test for equality, t-test, effect size such as the Eta squared and the mean, are utilized to analyze the data. Surprisingly, the results induce that demographic factors do not play an insignificant role in decision making under risk and may vary between the two markets. At the same time, the findings show that risk behavior and risk perception are different in the two markets. The study found a significantly more risk-averse attitude in terms of risk behavior and a significantly higher risk perception in the cryptocurrency market compared to the traditional equity market. Furthermore, risk perception is influencing the risk behavior in a similar magnitude in both traditional asset market and cryptocurrency market whereas the risk perception showed no relation to the risk behavior. The findings have implications for investors, institutions and policymakers, shedding light on the complex interrelationship in the risk attitude in emerging markets.

Keywords: Keywords: Risk Preference, Risk Perception, Risk Behavior, Crypto Currencies, Asset Markets