Risk Tolerance of Small-to-Medium Enterprise Owners and Operators Towards Capital Markets: Evidence from the Philippines

The purpose of this research was to determine the degree to which Small-to-Medium Enterprise (SME) owners and operators in Mountain Province were willing to take on financial risk to invest in the capital markets as a potential additional source of income, as well as the extent to which these five indicator variables-particularly their income, expenses, financial goals, liquid cash, and insurance coverage-were influenced by demographic factors. The study used a quantitative approach and employed a descriptive survey research method. The results show that the SME Owners and Operators in Mountain Province have minimal knowledge of capital market investments which makes them moderate investors with a neutral level of financial risk tolerance toward capital market investment. Their marital status, net income, and educational attainment significantly influence their financial risk tolerance level. The respondents also believe that engaging in the capital markets will grow their businesses. Further, the extent of influence of Income, Expenses, Liquid Cash, and Insurance Cover on the financial risk tolerance of the SME owners and operators in Mountain Province a great extent; thus, making them careful in investing in the capital markets, and it is primarily affected by their Net Income. Consequently, the financial goals of SME owners and operators in Mountain Province have a vital role in their financial risk tolerance level.