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

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  • Bannier, Christina E.
  • Neubert, Milena

Abstract

We study financial risk taking via standard and sophisticated financial investments. Using survey data on 2047 individuals, we find that standard investments are strongly associated with both actual and perceived financial literacy for men, but only with actual literacy for women. Sophisticated investments, in contrast, are significantly related to perceived financial literacy with an even stronger association for women than for men. Interestingly, there is no relation between risk tolerance and women’s sophisticated investments.

Suggested Citation

  • Bannier, Christina E. & Neubert, Milena, 2016. "Gender differences in financial risk taking: The role of financial literacy and risk tolerance," Economics Letters, Elsevier, vol. 145(C), pages 130-135.
    • Handle: RePEc:eee:ecolet:v:145:y:2016:i:c:p:130-135
    DOI: 10.1016/j.econlet.2016.05.033
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    References listed on IDEAS

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    More about this item

    Keywords

    Financial risk taking; Financial literacy; Risk tolerance; Gender; Household finance;
    All these keywords.

    JEL classification:

    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies

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