Run for the hills: Italian investors' risk appetite before and during the financial crisis

Purpose This paper sets out to corroborate the existing literature on investors' risk tolerance and to assess how the 2008 financial crisis has affected risk tolerance among Italian investors. Design/methodology/approach Based on a unique dataset of real-world portfolio choices made by 1,245 Italian investors over a period of 15 years (from 2003 to 2017), this paper presents two steps of analysis. In step 1, the whole period 2003–2017 is considered with the aim to integrate and corroborate the existing literature on the topic of risk tolerance, considering a complete economic and financial cycle. Step 2 took 2008 as the pivotal point between pre-crisis (2003–2008) and crisis (2009–2017) with the aim to observe the influence on risk appetite of the economic and financial effects of the crisis. Findings The results obtained confirm that men are more risk tolerant than women and older people are less risk-taking than their younger counterparts, although the relationship between age and risk tolerance is not necessarily linear. Moreover, our paper demonstrates that a crisis scenario has an influence on Italian investors' risk tolerance. Practical implications Our results are of interest to financial advisors, financial planners, asset managers, psychologists, behavioral researchers and more in general to providers of financial products and services. Originality/value The results presented in this paper are relevant and original because they are based on real investors who made real choices concerning their portfolio asset allocations.