Are women more risk-Averse than men regarding investment decision?

Abstract

This paper emphasizes the significance of how gender influences the decision of an individual while taking investment decisions. It investigates the possible impact of gender on investment behavior, risk tolerance, and preferred investment avenues. Prior research has investigated of female investors having lower risk tolerance than men and tends to steer clear of high-risk investment options. The study made an effort to highlight the disparities between men's and women's investing options and risk tolerance. Differential gender-based investing patterns have been shaped by cultural expectations and traditional gender stereotypes. In several past literatures women have always been underestimated by researchers in the magnitude of investment decision making as several past papers have shown they have encountered various social stigma and that are the possible reasons which have a greater impact on their investment choices. According to research, women frequently have more risk-averse attitudes than men do when it comes to their financial activities. In our present research paper we clearly get a striking disparity in the investment options and a remarkably distinct tolerance level for risk aptitude for male and female investors.

Full text

Journal of Management Research and Analysis 2024;11(2):118–122
Content available at: https://www.ipinnovative.com/open-access-journals
Journal of Management Research and Analysis
Journal homepage: https://www.jmra.in/
Original Research Article
Are women more risk-Averse than men regarding investment decision?
Sanhati Sengupta1*, Sarbani Mitra2
1Indian Institute of Social Welfare and Business Management, University of Calcutta, Kolkata, West Bengal, India
2Dept. of MBA-HRM, Indian Institute of Social Welfare and Business Management, Kolkata, West Bengal, India
ARTICLE INFO
Article history:
Received 15-03-2024
Accepted 22-04-2024
Available online 29-05-2024
Keywords:
Riskaverse
Gender
Investment Decisions
Risk Tolerance
Investment Avenues
ABSTRACT
This paper emphasizes the significance of how gender influences the decision of an individual while
taking investment decisions. It investigates the possible impact of gender on investment behavior, risk
tolerance, and preferred investment avenues. Prior research has investigated of female investors having
lower risk tolerance than men and tends to steer clear of high-risk investment options. The study made
an effort to highlight the disparities between men’s and women’s investing options and risk tolerance.
Differential gender-based investing patterns have been shaped by cultural expectations and traditional
gender stereotypes. In several past literatures women have always been underestimated by researchers
in the magnitude of investment decision making as several past papers have shown they have encountered
various social stigma and that are the possible reasons which have a greater impact on their investment
choices. According to research, women frequently have more risk-averse attitudes than men do when it
comes to their financial activities. In our present research paper we clearly get a striking disparity in the
investment options and a remarkably distinct tolerance level for risk aptitude for male and female investors.
This is an Open Access (OA) journal, and articles are distributed under the terms of the Creative Commons
Attribution-NonCommercial-ShareAlike 4.0 License, which allows others to remix, tweak, and build upon
the work non-commercially, as long as appropriate credit is given and the new creations are licensed under
the identical terms.
For reprints contact: reprint@ipinnovative.com
1. Introduction
Risk is associated with most of the economic exchanges.
So, it is not unexpected that a significant number of
researches had been conducted in this field to understand
how investors take their final decision regarding investment
while considering the factor risk. The popular theory of
risk-averse decision-making, expected utility, offers some
verifiable empirical predictions. Expected utility, however,
leaves the agent’s actual amount of risk-taking behaviour
as a free parameter, accounting for individual variances. To
understand it in the broader perspective let us consider the
prospect theory, which are more behaviourally oriented. The
widespread belief that female investors are not ready to take
risk rather they prefer less risky assets than men; this belief
is significant since it may help to explain certain significant
* Corresponding author.
E-mail address:sanghatisngpt1@gmail.com (S. Sengupta).
economic events. According to several empirical research
conducted to analyse how risk taking behaviour changes
with gender, it is evident that women prefer less risky assets
than men (Eckel and Grossman, 2008; Croson and Gneezy,
2009).
Recently, an increased focus on understanding the ways
that gender influences several socioeconomic domains,
including finance and investing. Traditional theories
about the role of gender and also the preconceived
notions have influenced society’s expectations a lot,
which has resulted in differences in decision-making
and economic prospects. The pursuit of greater gender
equality has made it imperative to consider the influence
of gender on investment choices and its potential
impact on economic outcomes. Making complicated and
multidimensional decisions regarding investments requires
analysing opportunities, determining risks, and allocating
https://doi.org/10.18231/j.jmra.2024.020
2394-2762/© 2024 Author(s), Published by Innovative Publication. 118

Sengupta and Mitra / Journal of Management Research and Analysis 2024;11(2):118–122 119
assets. These choices will have a big impact on people’s
lives, homes, and the economy as a whole. Gaining insight
into the ways in which gender may impact investing
decisions and results can help to clarify the fundamental
mechanisms at workplaces and promote more equitable
and inclusive financial systems. According to a survey
conducted by Gneezy and Potters (1997) where they have
created a scenario in which, the decision-maker is given $X
and asked to determine which amount of it, $x, she wants
to keep and how much to invest in a riskier option. With
probability p, the invested amount provides a dividend of
$kx (k > 1), and with probability 1 −p, it is lost. The
investor keeps the money that was not invested $(X −x).
Next, $(X −x + kx) with probability p and $(X −x) with
1−p are the payoffs. Since p and k are always selected so
that p ×k > 1, investing has a higher expected value than not
investing; so, someone who is risk-neutral or risk-seeking
should invest $X, whereas someone who is risk-averse may
invest less. According to Charness and Gneezy (2012) in
the previous experiment, the participants simply make the
decision to choose x. They presented data from every study
that tests risk aversion with this approach. Men chose a
higher x than women do, which is a persistent gender
difference reported despite the significant environmental
variables throughout the sets of tests. This is a stunning and
consistent conclusion.1–8
It is observed that their lies a sharp gender discrepancies
in the investment behaviour, according to multiple research
investigations. Several researchers have pointed out men
and women approach investing decisions in different
ways, displaying differing levels of financial knowledge,
investment methods, and risk preferences. The biological,
psychological, interpersonal, and cultural factors that
influence people’s attitudes and ideas around money
could be the reason for these variations. Women’s non-
willingness to bear risk may stem from several factors,
including not trusting the financial concerns, a reduced
exposure to investment options, or a stern wish to
protect wealth rather than pursue larger returns. However,
males tend to be bigger risk-takers, which mean that
they tend to use more aggressive investing tactics which
may lead to produce higher rewards or may result in
higher losses. Gender differences also go beyond risk
choices. Accessing financial resources, getting investment
advice, and overcoming conventional gender barriers in
the investing industry create barriers for women. Women’s
engagement in the investing markets might be restricted
by unequal access to opportunities and knowledge, which
can hinder their capacity to accumulate money and
become financially independent. Policymakers, financial
institutions, and researchers are putting more efforts to
encourage gender diversity and inclusion in investment
decision-making thus addressing these gender inequities.
A constant effort is made to bridge the gender gap in
financial education, increase women’s access to investment
resources, and create a welcoming climate for women
pursuing professions in finance. By creating more inclusive
institutions, we can maximize the potential of diverse
perspectives and enhance overall financial outcomes for
individuals and society as a whole.9–14
2. Literature Review
A report published at The Economic Times (2024) a joint
poll conducted by DBS Bank and ratings company Crisil,
women earners in the metro areas are generally risk-averse,
with 51% of their investments held in fixed deposits (FD)
and savings accounts, followed by 16% in gold, 15% in
mutual funds, 10% in real estate, and just 7% in stock. The
data from DBS Bank India’s customer insights indicates that
a proportion of 10% of female customers have an active
fixed deposit, whereas only 5% of male customers who have
opened an FD.
According to Jain (2021) women investors are still only
prepared to make investments in the financial sectors that
are regarded as safe. More investigation revealed that family
investing culture or trend is a major factor while making
investment-related decisions. The most popular traditional
investment options are gold and bank deposits, but the most
favourable are the mutual fund investment as they are well-
liked among financial investment options.15–18
As per Joseph et.al (2020) women who are employed
rarely purchase shares and mutual funds. They invest in
banks by means of the conventional methods, such as fixed
deposits and savings accounts. A small portion of them
make investments based on their husbands’ opinions. While
selecting different investment modalities women investors
are much more concerned than male investors.
Ajabnoor and Faisal (2023) illustrate the investing
habits of a broad set of women participants with varying
professional backgrounds and a modest propensity for risk-
taking. While emotional reasons and market conditions
can also influence investment decisions, participants also
typically rely on a combination of independent decision-
making and advice from others.
Numerous scholarly investigations have explored
whether women truly exhibit risk aversion while making
investing decisions. According to Powell and Ansic
(1997), regardless of familiarity, framing, expenses, or
ambiguity, unlike men women have a hostile tendency
towards risk taking. In a similar vein, some researchers
discover that women in professional finance roles behave
more cautiously. Moreover, Niessen and Ruenzi (2007)
study of professional mutual fund managers in the United
States demonstrates that female managers are more risk
adverse investors. According to Johnson and Powell (1994),
the stereotype depends on the basis of discrimination
against women. Because companies have this confirmation
regarding women that they are not as risk-takers as men are,

120 Sengupta and Mitra / Journal of Management Research and Analysis 2024;11(2):118–122
they give them fewer opportunities to advance than they do
people.
According to Chen (2008) Clarity brought about by a
lack of information may make the perceived risk higher.
Additionally, due to limited accessibility to information
technology, women are at a disadvantage when it comes to
acquiring information. As greater uncertainty arises, this can
discourage women from taking risks. Every investor in the
financial markets also faces pressure. Recent empirical data
indicates that when making investment decision under stress
women tends to get much more aware regarding taking
risks.
Alemany et.al (2020) While, choosing stocks, investing
in venture capital, and making acquisitions, women take
fewer chances. As described in previous research and
conventional wisdom tend to indicate that women really like
to take very less risk compared to men.
Hibbert et.al (2008) contends both are uniformly risk-
averse when people have the same educational background
and financial literacy. They have discovered factors, such as
age, wealth, income, marital status, race or ethnicity, and
the total number of child under the age of 18 living in the
household, influence the relationship between gender and
risk aversion.
Watson and McNaughton (2007) implied that women
pick more conservative investing strategies than do males,
the crucial reason why women’s predicted retirement
benefits are lower is because they make less money, which
has an impact on the amount they set aside for their
superannuation plans.
Croson and Gneezy (2009) explored the differences in
risk appetites between genders, which are an important
consideration when making financial decisions. They
examined how both the genders differ from one another in
terms of their willingness to take on financial risks and finds
that, women are mostly less risk-tolerant than men. The
results imply that risk preferences vary by gender and may
have an impact on investing decisions, with women possibly
being more cautious investors.
Barber and Odean (2001) Assessed how gender
stereotypes and overconfidence affect investment decisions.
The study found that men seem to have an excessive
amount of confidence in their abilities to invest, which
leads to more trading and fewer investment gains than
women. The findings suggest that variations in risk-taking
and confidence between genders may have an impact on
investing performance.
Terjesen and Singh (2008) evaluated how gender
diversity influences the investment decision of the corporate
boards. The findings indicate a correlation between gender
diversity within a company and positive investment
outcomes, implying that more women on boards could lead
to more deliberate and long-term investment decisions. The
research highlights how significant gender diversity is in
governing bodies for enhancing investment strategies.
Barber and Odean (2000) monitored the trading patterns
and financial results of specific investors. They pointed
out men typically trade more often and use speculative
investment tactics, which reduce investment returns. And
women get better returns when they invest in a more
conservative manner. They also analysed in the study,
behavioural biases are distinct for male and female investors
and it can heavily affect investing decisions and results.
3. Research Objectives
The prime objectives of the study are as follows:
1. To analyse if there is any significant difference in
investment avenues selected by male and female
investors.
2. To envisaged the extent of relationship between gender
and financial risk taking capability.
3.1. Research hypothesis
1. There is no significant difference between gender and
the choice of investment avenues.
2. There is a significant difference between gender and
the choice of investment avenues.
3. There is no significant difference between gender and
risk tolerance level.
4. There is a significant difference between gender and
risk tolerance level.
4. Research Methodology
For the said study the primary data was collected using a
survey questionnaire. For the purpose of data collection, the
questionnaire was distributed among stock market investors
of Kolkata. The questionnaire asked a number of statements
about the concerned demographic. The questionnaire was
distributed in both offline and online modes to stock
market investors who made investments. A number of
survey questions were incorporated to assess the pertinent
elements. The internal consistency of the data indicates that
the total Cronbach’s alpha coefficient is.908. Conversely,
the item-wised Cronbach’s alpha values, which are also at
an appropriate level, show that all the variables in question
display internal consistency. After gathering all relevant
data, the following stage is to analyse the information to
identify a solution and address the research questions.
4.1. Data collection
The primary data was collected from September 2023 to
December 2023. A total of 200 respondents returned the
questionnaire, for an overall response rate of 80%. The
questionnaire was distributed to 250 respondents with the
intention of reviewing the results.

Sengupta and Mitra / Journal of Management Research and Analysis 2024;11(2):118–122 121
Table 1: Respondents categorised by demographic variables
Gender Age Marital Status Educational Level
Male Female 18-33 34-49 50-65 Above
60
Married Single Widow Diploma Under
graduate
PostgraduateOthers
108 92 82 64 38 16 79 110 11 55 70 61 14
Table 2: Descriptive statistics
Group Statistics Gender N Mean Standard
Deviation
Standard Mean
Investment
Avenues
Males 108 3.0918 0.56317 .07187
Females 92 2.38576 0.96133 .12968
Financial Risk
Tolerance
Males 108 3.1708 1.11519 .16274
Females 92 2.3457 1.15097 .17368
Table 3: Independent sample t Test
Independent Samples
Test
Levene’s Test for Equality of Variance t-test for Equality of Means
F Sig. t df Sig. (2
tailed)
Mean
Difference
Std.
Error
Difference
95% Confidence
Interval of the
Difference
Lower Upper
Investment
Avenues
Equal
variances
assumed
24.745 .000 4.857 198 .000 .74536 .15075 .45767 1.03292
Equal
variances not
assumed
4.856 79 .857 .000 .74536 . 15760 .42232 1.07608
Level
of Risk
Tolerance
Equal
variances
assumed
.018 .900 3.260 198 .002 .73147 .22054 .28724 1.17026
Equal
variances not
assumed
3.210 85 .259 .002 .73147 .22103 .25463 1.27189
4.2. Analysis of data and research findings
Using SPSS 23.0; the primary phases of the analysis were
carried out, including data screening and parametric tests
such as t-tests. Table 1 shows the demographic distribution
of the collected samples.
Table 2 shows the descriptive statistics for gender
differences in investment pattern the results shows a
difference in mean and standard deviation for investment
avenues between male (M= 3.09, SD = 0.56) and females
(M = 2.38, SD = 0.96) and financial risk tolerance level
between males (M = 3.17, SD = 1.11) and females (M =
2.34, SD = 1.15).
From the results of the independent sample t-test which
was conducted to compare the investment decision making
scores for males and females displayed in Table 3 we reject
the null hypothesis as it is clear that there is a significant
difference in selection of investment avenues between male
and female investors. The results also indicate the difference
in the level of risk tolerance between the male and female
investor of the city of Kolkata so, the null hypothesis
is rejected that there is no significant difference between
gender and risk tolerance level. For both of our above
mentioned hypothesis the null is rejected.
5. Conclusion
The study reveals that male and female stock market
investors in Kolkata make different financial decisions.
According to the study, there lie the sharp indifferences
between the risk taking capacities of both the genders.
While men seek higher returns and are willing to take on
risk in order to reach their financial objectives, women
speculates more when it comes to investing options and
prefer risk-free alternatives. The study’s findings support
previous studies which all pointed out that while taking
financial decisions, women are more risk-averse than men.
6. Recommendations
The present study mainly focuses on things classified
by gender; researchers who intend to carry out further
research are urged to choose objects based on other
demographic criteria such as income, age, and occupation
as the major emphasis of the object. As several research
studies have pointed out that female investors seek for a

122 Sengupta and Mitra / Journal of Management Research and Analysis 2024;11(2):118–122
different kind of interaction with financial professionals
than do male investors, the investment industry has recently
acknowledged the validity of targeting female investors as a
distinct market niche.
7. Source of Funding
None
8. Conflict of Interest
None.
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Author biography
Sanhati Sengupta, Ph.D. Scholar
Sarbani Mitra, Professor and Head
Cite this article: Sengupta S, Mitra S. Are women more risk-Averse
than men regarding investment decision?. J Manag Res Anal
2024;11(2):118-122.