Home > Risk-Taking > The gender effect in risky asset holdings1☆

The gender effect in risky asset holdings1☆

The gender effect in risky asset holdings1☆

Journal of Economic Behavior & Organization

We study the relation between gender and stock holdings in Finland, a particularly gender equal country. We show that it is crucial to control for risk aversion using a measure of subjective risk-taking, rather than measures derived from abstract gambles. Controls related to financial knowledge and resources also explain the gender difference. The residual effect of the male gender on the conditional equity share, after all appropriate controls, is 3 percentage points and statistically significant. The effect on stock market participation on the other hand is close to zero or negative, so men contribute more to the nonparticipation puzzle conditional on covariates. The gender difference mainly works through women’s higher risk aversion, which we find extends to finance professionals and wealthy private banking customers.

 Keywords: risk preferences; portfolio choice; gender difference
Author Keywords: G11, D81, J16

star, open1We thank two anonymous referees, the editor (Rachel Croson), Markku Lanne, Elias Rantapuska, as well as the participants in the MOVE (Markets, Organizations and Votes in Economics) Workshop on Gender Differences in Competitiveness and Risk Taking in Barcelona, 2010, for comments, and Wei Li and Niklas Jahnsson for research assistance. This research was supported by the Academy of Finland, aivoAALTO project, OP Bank Group Research Foundation, and the Finnish Foundation for Advancement of Securities Markets.

Categories: Risk-Taking
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