Analysis of financial risk tolerance among undergraduate university students: a case study of school of statistics and planning, Makerere University

Abstract

This study analyzed financial risk tolerance and its associated factors among undergraduate students at the School of Statistics and Planning, Makerere University. Specifically, the study sought to determine the level of financial risk tolerance and examine the socio-demographic, financial knowledge, and financial experience factors associated with financial risk tolerance. A cross-sectional research design was employed. Data were collected from 298 undergraduate students selected from the Statistics, Actuarial Science, Quantitative Economics, and Population Studies programs using a structured questionnaire. Data were analyzed using Stata SE 15.0. Descriptive statistics were used to summarize respondents' characteristics and levels of financial risk tolerance measured using the Grable and Lytton Financial Risk Tolerance Scale, while chi-square tests and ordinal logistic regression were used to examine factors associated with financial risk tolerance. Descriptive analysis showed that the majority of respondents (63.42%) exhibited a moderate level of financial risk tolerance, while 25.17% had high financial risk tolerance. At the bivariate level, gender, understanding of inflation, and frequency of mobile money usage were significantly associated with financial risk tolerance, whereas the remaining socio demographic, financial knowledge, and financial experience variables were not significantly associated. Multivariate analysis using ordinal logistic regression revealed that gender and understanding of inflation remained significant predictors of financial risk tolerance. Male students were more likely to exhibit higher financial risk tolerance than female students, while respondents who did not correctly understand inflation were less likely to exhibit higher financial risk tolerance. The study concludes that undergraduate students at the School of Statistics and Planning generally demonstrate moderate financial risk tolerance, and that gender and financial knowledge, particularly understanding of inflation, are important determinants of financial risk tolerance. The study recommends strengthening financial literacy programs within universities by placing greater emphasis on practical financial concepts such as inflation, savings, budgeting, and personal financial management to enhance students' financial decision-making. Future studies should include students from other universities and adopt longitudinal research designs to provide broader evidence on financial risk tolerance among young adults.