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Corporate Governance and New Product Offerings at Local Commercial Banks in Pakistan

Naz, Sana (2008): Corporate Governance and New Product Offerings at Local Commercial Banks in Pakistan.

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Abstract

The main objective of this study is to analyze the determinants of risk-taking behavior. Consistent with models of risk return, we indicate that risk-taking behavior in the context of investment is affected by the risk of self-attitudes, and perceptions of risk and return expectations. One implication of our study is that objective measures of risk, such as historical volatility and return, are not able to determine the risk-taking behavior almost as well as subjective measures, the risk perceptions and self-return, especially the historical returns seems to be a poor indicator of risk-taking behavior. Moreover, we find substantial differences between the self-perceptions of risk is inferred from the interval estimates and inferred from those of the Likert scales. Our results also indicate that, in line with theoretical models, behavioral biases such as overconfidence and excessive optimism significantly affect risk behavior. Those investment advisers can try to incorporate some of these results in the consultative processes to correct the erroneous beliefs of investors. This can be achieved through the strengthening of the patch from the financial literacy of clients as well as showing them that their investment is required is probably more serious than originally envisaged by them. We also find evidence of the expanding scope of content in the privacy of our data. Determinants of risk-taking behavior differ not only between the two areas of content and very clear, but even in the field of investments. Show that the determinants of risk behavior in the field of investments, lottery does not need to be able to predict the risk in equity investments, and vice versa. Measuring risk attitudes using lotteries approach is useless and therefore if we want to predict the behavior of risk in financial securities. It therefore seems that (method is used to have, for example, often in surveys of large plate-sized enterprises, such as socio-economic panel (SOEP), as well as in the banking industry) to extract positions risk customers by asking them about his conviction cannot predict the risk behavior of individuals.

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