The Moderation Role of Religiosity on the Relationship Between Risk Tolerance and Financial Behavior of Small Businesses’ Owners

Abstract

From the psychology and religious perspective, there is a growing faith that religiosity influences financial behavior. Most available literature has only discussed religiosity as the antecedents of investment behavior in various contexts. There are no yet inquiries in financial behavior that examine the role of religiosity as a moderating variable. Hence, this study has provided novelty by testing the role of religiosity as a moderating variable in the relationship between risk tolerance and financial behavior. The population of this study was Muslim SMEs owners in Banyumas Regency, Indonesia. Ninety-one respondents were interviewed using a structured questionnaire. This study found that risk tolerance and religiosity variables had a positive and significant effect on financial behavior. The interaction effect of the religiosity variable would weaken risk tolerance on financial behavior. This research had significant implications for the development of financial behavior theory in SMEs and developing SMEs.