Examining the relationship between farmers' perceived trust and investment preferences

This paper investigates whether trust influences investment decisions. We analyse the 2015/2016 Nigeria General Household Survey data from 4582 households. We find that trust, risk and time preferences are important determinants of investment choice. A high trust decreases the chance of investing in low risk and low-profit businesses. That is, more trusting individuals prefer riskier high return investments. In contrast, impatience and risk avoidance increase the chances of investing in low-risk, low-return businesses. This paper will be useful in planning an investment instrument that is both suitable for specific individuals and aligns with the expectations of financial institutions and government.