Gender differences in financial risk taking: The role of financial literacy and risk tolerance

Bannier, Christina E.; Neubert, Milena

doi:10.1016/j.econlet.2016.05.033

Cited by 173 publications

(72 citation statements)

References 19 publications

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“…Irrational investors assume that securities’ market arbitrage is imperfect, as there are no free entrances and exits, so they believe that prices cannot be in equilibrium ( Baker et al, 2007 ). Scholarship based on the prospect theory suggests that fluctuations in stock prices are based on several factors, including human errors that arise from investors’ using instincts, feelings, habits, emotions, thinking, reason, risk, and social interactions to make decisions ( Bannier and Neubert, 2016 ). Investors’ investment decisions involve cognitive biases ( Fama, 1998 ; De Bondt et al, 2013 ) and heuristic biases ( Oehler et al, 2018 ; Ceschi et al, 2019 ).…”

Section: Introductionmentioning

confidence: 99%

Cognitive Bias and the Extraversion Personality Shaping the Behavior of Investors

et al. 2020

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The paper examines the direct and indirect effects (via investors' risk perception) of heuristic biases on investors' irrational behavior in decision-making. The study also investigates the moderating effect of investors' extraversion on both the direct and the indirect associations between heuristic biases and irrational decision-making. Based on survey data collected from 247 investors registered in various brokerage houses in Pakistan and the analyses (mediation and moderation) performed using the Process Macro technique (proposed by Hayes, 2017) in SPSS, the results of this study reveal that heuristic biases positively affect investors' irrational decision-making both directly and indirectly via risk perception. The results reveal that extraversion moderates both direct and indirect associations between heuristic biases and investors' irrational behavior in decision-making. Our findings carry useful practical implications for organizations' policymakers.

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Section: Introductionmentioning

confidence: 99%

Cognitive Bias and the Extraversion Personality Shaping the Behavior of Investors

et al. 2020

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“…Gender gaps in financial literacy exist for a variety of demographic and socioeconomic groups, including teenagers (Bottazzi & Lusardi, ; Driva et al ., ), university students (Gerrans & Heaney, ) and migrants (Karunarathne & Gibson, ). Statistically significant male–female financial literacy gaps have been documented in a number of studies (Lusardi & Mitchell, , , ; Hung et al ., ; Bateman et al ., ; Woodyard & Robb, ; Agnew et al ., ; Lusardi et al ., ; Agnew & Harrison, ; Almenberg & Dreber, ; Bannier & Neubert, ; Hasler & Lusardi, ; Killins, ). However, few have specifically examined the determinants of the gap, with the exceptions being Cupák et al .…”

Section: Introductionmentioning

confidence: 99%

Understanding the Gender Gap in Financial Literacy: Evidence from Australia

Preston

Wright

2019

Economic Record

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Using micro‐data from the Household, Income and Labour Dynamics in Australia Survey, and the Oaxaca–Blinder decomposition technique, this paper examines the determinants of the gender gap in financial literacy. The analysis suggests that human capital variables, such as age and education, are not important in explaining the gender gap in financial literacy. Labour market variables, such as sector, occupation, industry, union membership and labour market status, are important and explain around 16 per cent of the gap. This finding is dependent on the assumption that these variables are exogenous. There is a large unexplained gap, suggesting that the main determinants are neither human capital nor labour market factors.

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“…Regarding socio-demographic data, results of most studies indicate a gender effect and generally men perform better than women in financial literacy tests (Chen and Volpe 2002;Mitchell 2011, 2014;Hung et al 2009;Atkinson and Messey 2012;Woodyard and Robb 2012;Agnew et al 2013;Bucher-Koenen et al 2014;Schuhen and Schürkmann 2014;Agnew and Harrison 2015;Almenberg and Dreber 2015;Filipial and Walle 2015;Bannier and Neubert 2016;Ergün 2017;Gramatki 2017;Hasler and Lusardi 2017;Killins 2017;OECD 2017;Strömbäck et al 2017;Förster et al 2018;Greimel-Fuhrmann and Silgoner 2018;Happ et al 2018;Preston and Wright 2019). While most studies find these differences when the construct is modelled onedimensionally 1 (Rudeloff et al 2019), there are some studies that model financial literacy multi-dimensionally and find differences in partial facets in favor of women.…”

Section: Gendermentioning

confidence: 99%

Measuring financial literacy with a Situational Judgement Test: do some groups really perform worse or is it the measuring instrument?

Wuttke

Siegfried

Aprea

2020

Empirical Res Voc Ed Train

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Due to current trends in society and economy, financial literacy is often considered as an important twenty-first century skill. However, regardless of the postulated relevance, studies suggest that financial illiteracy seems to be a widespread phenomenon in the population of many nations. Some studies also show that some groups perform particularly poorly (e.g. women, persons with migration background and/or low level of education). These differences are often attributed to different individual characteristics such as abilities, dispositions or socialisation patterns. However, available research also suggests that even after controlling for them, a quite large portion of the performance differences between the various groups of test-takers remains unexplained. One explanation for performance gaps in financial literacy might be that differences in test scores could also be evoked by the test instruments itself and may thus, at least in part, be interpreted as testing bias. In this paper, we present a newly developed Situational Judgement Test, which is focused on financial competence. For this test, we examine whether differences between groups are attributable to individual differences or due to a test bias. To analyse a possible test bias, we tested one facet of financial literacy (with three factors: control of one’s financial situation, budgeting and handling of money) related to everyday money management for measuring invariance for different groups. If measuring invariance could be assumed, we analysed group differences by calculating t-tests. Results show that two factors of the test show measurement invariance for all groups considered (gender, migration and educational background, opportunities to learn). Group comparisons are thus possible and potential differences are not due to a test bias. For one factor, we can only assume measurement invariance for the group with/without migration background and with/without opportunities to learn in financial topics. When we look at group differences, we find that in contrast to the findings of many previous studies, the analysis of the mean differences does not show any systematic deficits in financial literacy for specific groups.

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Gender differences in financial risk taking: The role of financial literacy and risk tolerance

Cited by 173 publications

References 19 publications

Cognitive Bias and the Extraversion Personality Shaping the Behavior of Investors

Cognitive Bias and the Extraversion Personality Shaping the Behavior of Investors

Understanding the Gender Gap in Financial Literacy: Evidence from Australia

Measuring financial literacy with a Situational Judgement Test: do some groups really perform worse or is it the measuring instrument?

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