The Gender Investment Gap: Reasons and Consequences

49 Pages Posted: 27 Jan 2024

See all articles by Alexandra Niessen-Ruenzi

Alexandra Niessen-Ruenzi

University of Mannheim, Department of Finance; University of Mannheim - Department of Finance

Leah Zimmerer

University of Mannheim - Finance Area; University of Mannheim - Graduate School of Economic and Social Sciences

Date Written: January 12, 2024

Abstract

This study analyzes gender differences in money attitudes and their consequences for financial decision-making. Women, compared to men, report larger financial constraints, higher risk aversion, perceived stress in financial matters, and lower trust in financial institutions. As a result, women save and invest less consistently than men. Conditional on investing, women use fewer financial products, particularly in equity investments. We find a significant gender gap in stock market participation, with 17.6% of women and 32.3% of men investing. The motives and barriers influencing stock market participation also diverge, with men leaning towards short-term gains and the thrill of investing, while women commonly cite unfamiliarity with stocks and fear of potential losses as primary reasons for non-participation. These findings underscore the importance of tailoring financial services and educational initiatives to meet the specific needs of women.

Keywords: Gender investment gap, Risk aversion, Financial literacy, Investment behavior

JEL Classification: G11, G41, G53

Suggested Citation

Niessen-Ruenzi, Alexandra and Niessen-Ruenzi, Alexandra and Zimmerer, Leah, The Gender Investment Gap: Reasons and Consequences (January 12, 2024). Available at SSRN: https://ssrn.com/abstract=4692726 or http://dx.doi.org/10.2139/ssrn.4692726

Alexandra Niessen-Ruenzi

University of Mannheim, Department of Finance ( email )

L9, 1-2
Mannheim, 68131
Germany
+49 621 181 1595 (Phone)

University of Mannheim - Department of Finance ( email )

Mannheim, 68131
Germany

Leah Zimmerer (Contact Author)

University of Mannheim - Finance Area ( email )

Mannheim, 68131
Germany

University of Mannheim - Graduate School of Economic and Social Sciences ( email )

D7, 27
Mannheim, 68131
Germany

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