Abstract
This study examines the effects of subjective and objective financial knowledge on investment risk tolerance among Egyptian individuals. Using data from 974 individuals, we apply the ordered logit regression model of risk tolerance as a function of financial knowledge, financial education, financial experience, and demographic characteristics. The findings indicate that subjective financial knowledge is a significant positive predictor of risk tolerance, especially among young and male individuals, while objective financial knowledge has an insignificant effect. Although the results indicate that there is bias in the self-assessment of knowledge among Egyptian individuals, this bias has weak explanatory power regarding risk tolerance. Financial education has a positive and significant effect on risk tolerance, but financial experience has a weak effect. This study presents practical implications regarding the design of financial literacy programs and the integration of perceived financial competence in risk tolerance assessment.