Gender differences in investing

However, the DIW does not believe this confirms an inherent risk aversion on the part of women. Ample economic literature suggests there are real differences between the sexes when it comes to trading and investing. Over time, these differences are likely to decline but not disappear altogether. Contact us. Personal Finance. Implications regarding marketing strategies for the financial services sector are discussed.

The more you know about yourself, in particular, and investing, in general, the more likely it is that you will obtain a better investing results. Last week Eve Kaplan posted an article about Women and Money. This article will be a bit more specific as to investing. It is not the intent state that the differences are genetic, cultural, and sociological or some combination of the three that cause these measurable differences. The following is a gender differences in investing of data gleaned from numerous articles and papers derived from a variety of independent sources. It is important to remember that the following are merely tendencies and not absolutes. In other words, out of a large sample of both sexes, there are measurable gender-based differences, but by no means should that be construed to suggest that all women do this while all men do .

Although there are some studies for the investors in developed countries, the subject has been overlooked in emerging and underdeveloped countries. Therefore, this study is the first empirical study exploring the investment behaviors of women and men by focusing on an emerging country, Turkey. For the purpose to find out how investment preferences of men and women differ towards six investment tools, namely, gold, foreign currency, funds, common stocks, real estates, and time deposits, a discriminant analysis and a logistic regression were exercised. The results revealed that while men investors prefer common stocks and real estate to invest women investors are more risk averse and invest fund, time deposit and gold. There is no significant difference between men and women in foreign currency investment.

Although there are some studies for the investors in developed countries, the subject has been overlooked in emerging and underdeveloped countries. Therefore, this study is the first empirical study exploring the investment behaviors of women and men by focusing on an emerging country, Turkey. For the purpose to find out how investment preferences of men and women differ towards six investment tools, namely, gold, foreign currency, funds, common stocks, real estates, and time deposits, gsnder discriminant analysis and a logistic regression were exercised.

The results revealed that while men investors prefer common stocks and real estate to invest women investors are differrnces risk averse and invest fund, time deposit and gold. There is no significant difference between men and women in foreign currency investment. Department of Management, Fatih University, Turkey. This has been largely attributed to gender differences in risk taking behavior by several scholars Charness and Gneezy ; Bozkus and Ucdogruk, ; Eckel and Grossman Subsequently, it was evidenced that women are more risk averse than men and thus when it comes to investing they invest more conservatively and less in amounts than men.

However, it is important to note that the studies on gender differences in investing have been mostly concentrated on data from developed countries, especially from U. Notwithstanding this it is widely acknowledged that people in developed countries differ drastically in many aspects, such as beliefs, life styles, behaviors, habits, personal characteristics, from those in emerging countries.

Then, it may be expected that investment attributes of women living in developed countries differ from investment attributes of women living in emerging countries, such as Turkey. To illustrate, in an empirical study by Starr and Tran it was found that there is a much higher physical demand for gold that is, acquisitions of gold in physical forms such as jewelry, bars, coins and medallions- in Eastern countries, such as, India, Pakistan, Turkey, than in Western countries. It was shown that Vietnam s gold imports per capita were not far from those of France and Germany, despite the fact that per capita GDP in Vietnam is about 20 per cent that of France or Germany.

Starr and Tran assert that culture seems involved since the countries that demand more gold than would be expected from their characteristics are those known for having traditions in which gold plays a part, as in India, Turkey, China where gifts of gold egnder are customarily given to newly married couples, differemces babies.

Thus, in Eastern countries, the role of gold as precautionary savings is at least as important as, if not more important than, its personal adornment aspect. Therefore, it is important to study this issue for Eastern countries as.

We contribute to this line of research by examining gender differences in investment preferences in Turkey. To the best of our knowledge this is the first study that provides evidence on differfnces issue from an emerging country, like Turkey.

The paper is organized in three parts. First, the brief reviews of literature in gender differences in risk preferences together with prior studies on gender differences in investment decisions are provided. In the second part, the modeling framework In the last digferences, the discussion of results and conclusion, as well as, limitations of the study together with recommendations for future studies is provided. Literature Review Prior Studies on Gender Differences in Investment Decisions The empirical study conducted by Estes and Hosseini is one of the earliest studies exploring gender differences in investment.

The authors in their study attempted to identify the personal characteristics that influence confidence in an investment decision. It was evidenced that women had significantly lower confidence in an investment task than men, after controlling for all other relevant variables and characteristics nivesting the amount of the investment decision.

Familiarity with and present attitude about investing in the stock market, college credit hours in accounting and finance, experience in evaluating common stocks, the current level of the stock market, and the investment decision itself the amount to be invested were also found to be significant.

On the other hand, age, value of personal portfolio, years of college and years of business experience were not found to be significant characteristics. Similarly, in another study conducted by business students it was found that females are less likely to take business risks than males Zinkhan and Karande On the other hand, fifferences a more recent study by Charness and Gneezy on this subject area, stocks and personal businesses were categorized as more risky iin, whereas, certificates of deposits, government bonds and real estate were viewed as relatively low-risk and lower return investments.

Subsequently, it was found that women choose to gdnder in stocks and personal businesses less often and in low amounts than men but they choose to invest more often and in high amounts in low-risk, lower return assets, the certificates of deposit and homes Charness and Gneezy ; Eckel and Grossman ; Bajtelsmit differencs Bernasek This conservative investment strategy was observed to become even more severe when a woman makes a long-term investment decision, such as pension fund investments.

Although portion of this pattern was attributed to women s lower wealth accumulated by their lower incomes earned during their interrupted work lives by In addition, the conservative and risk aversive investment strategy of women was evidenced to not differ regardless of occupation, as well as, the level of expertise and experience.

It was found that even if a woman is a fund manager, she keeps her risk aversive stance and thus offers her clients lower risk and lower return investment alternatives Atkinson et al. Similarly, if the woman is an angel investor, she then lnvesting to invest less in amount and rather in later stages of investment projects, in relation to her male counterparts Becker-Blease and Sohl This appears to be so even when decision-makers of both genders have the same level of expertise and experience.

To illustrate, in a study focusing on professional men and women investment managers, it was found that when faced with social and technological hazards, women are more risk averse than men. It is found that women investors weigh risk attributes, such as possibility of loss and ambiguity, more heavily than their male colleagues.

In addition, women tend to emphasize risk reduction more than men in portfolio construction. On the other hand, the gender differences in financial investment decisions are an extremely primitive research area in Turkey. Unfortunately, there is not any published article on the topic exploring the subject area in-depth.

Rather there are a few works that were written by Bozkus and Ucdogruk and Tunali and Tatogluexploring Turkish households investments choices in general.

Bozkus and Difverences in their study of Invwsting Investment Choices classify Turkish people s investment choices into four categories gebder ; 1. Those who avoid risky ventures and investing in real estates.

Those investing in foreign currencies and gold 3. Those gende in common stocks, funds and bank accounts registered investors 4. Moreover, authors determined elements affecting investment choices by analyzing with multinomial logit model.

They obtained a data of 1, respondents from public surveys conducted in the city of Istanbul in Turkey that can be accepted as a small sample of Gender differences in investing. Gender Differences in Risk Preferences The existence of gender differences in investing has kn attracting a great deal of attention by vifferences during the last two decades Estes and Hosseini ; Zinkhan and Karande ; Bajtelsmit and Bernasek ; Embrey and Fox ; Jianakoplos and Bernasek ; Olsen and Cox ; Coleman ; Atkinson et al.

Moreover, several scholars in their studies concluded that the gender differences in investment behaviors occur rather as a result of gender differences in risk-taking behaviors Estes and Hosseini ; Jianakoplos and Bernasek ; Coleman ; Atkinson et.

Men and women respond to risk differently and by way of background this claim has been supported by numerous studies that women are more risk averse than men. In the literature four explanations can be noticed for these gender differences in risk preferences. First, it was found that women and men may differ in their genderr attitudes or utility functions for risk. Cultural, social or psychological factors may cause men to bear more risk than women Eckel and Grossman To illustrate, it was evidenced by Spigner et al.

Second, there are also several studies in the literature suggesting that gender differences in risk bearing might be due to differences in economic status Estes and Hosseini ; Charness and Gneezy ; Bajtelsmit and Bernasek For example, women often have lower wealth accumulated by their lower incomes earned during their interrupted by e.

Then, if higher income workers were more willing to bear risk, men will be more risk bearing according to these differences in wealth and income Bajtelsmit and Bernasek ; Hinz et al.

If individuals with a longer time horizon have a greater ability to bear risk women would be expected to hold riskier portfolios than men. Hinz et al. However, just on the contrary, it can be expected that women follow a less risky investment strategy since Social Security units of almost all governments all around the world provides only a minimal level of financial support during retirement. Thus, women need additional financial resources that they can t risk, to maintain their standard of living during their retirement years Bajtelsmit and Bernasek ; Coleman Fourth, gender differences in risk taking may occur due to gender differences in information and confidence in their financial knowledge.

To illustrate, it was found that women know less and are less confident about their knowledge of investments as compared to men, Estes and Hosseini ; Barber and Odeanwhich in turn differencds in women investing more conservatively and at the same time in less amounts than men Eckel and Grossman ; Charness and Gneezy ; Becker-Blease and Soul Then, this study aims at taking a step further and investigating the differences between women and men in particular investment decisions.

The analysis is done among the six investment categories, namely gold, foreign currency, real estate, common stocks, time deposit and funds. Modeling framework and differenes In our analysis we used data from a web based survey which was conducted to Turkish individual investors. The survey was conducted online, because internet is the most appropriate medium to reach the desired model of internet users and opens the possibility of reaching investors outside of one geographical region.

The target population was the people living in Turkey and having potential to invest in Turkey. The research was conducted with the participation of people from wide variety of occupations. The income levels of the participants were mostly middle and high income levels. The target population mostly consisted of educated people. Responses submitted through the primary survey site were saved onto a file by tallying the addresses from each response set with the personalized mailing list.

Of the approximately personalized s sent out, were returned by the servers. Out of this lot, 95 of the responses were excluded because 35 of them have missing data and 60 responses were from the participants living outside the Therefore, data were collected from a total of respondents.

As mentioned previously this study mainly examines gender differences in investment preferences as an example from emerging country. We compared these two groups according to the six investment categories namely; real estates, foreign currencies, gold, common stocks, funds, and time deposits.

For this comparison discriminant analysis and logistic regression were implemented. Discriminant analysis iin a multivariate statistical method designed to study the differences between two or more groups with respect to several variables simultaneously. The parameters a i have to be determined in such a way that the discrimination between the groups is best.

Then the analysis was conducted to understand the investment differences between the individual male and female investors in Turkey. Investment tools were the predictor variables while whethheahter tor is male or female is the dependent variable of the model. We also ran a logistic regression analysis as a robustness check since logistic regression uses maximum likelihood estimation and estimates the probability of a certain event occurring.

Then similarly, investment tools were the predictors diffreences whethheahter tor is male or female is the dependent variable of the model.

Significant mean differences were observed for all the predictors between male and female investors except the investing in foreign currency see Table 2. Common stocks Fund Time deposit Foreign currency Gold Real estate The discriminant function coefficients indicate the unstandardized scores concerning the independent variables. It is the list of coefficients of the unstandardized discriminant equation. Each subject s discriminant score would be computed by entering his or her variable values raw data for each of the variables in the equation.

The discriminate function of the model is: Since males in the model were coded by 1 investibg females were coded by zero, the predictors with positive coefficients such as common stocks and real estate noted that males invest more than females while the predictors with negative coefficients such as fund, time deposit and gold indicated that females invest more than males in those investment tools.

The hypothesis that tests the coefficient of foreign currency if zero couldn t be rejected. Below the logistic regression function is given as. Results interpreted in the same way; positive coefficients mean that males invest more than females in that investment tool. Therefore, common stocks and real estates were preferred more by males than females but, fund, time deposit and gold were preferred by females more than males.

Similarly, the logistic regression model also found no significant difference between men and women investing in their preference for foreign currency investments. Discussion of Results and Conclusion Although it is difficult to designate in general a particular asset as riskless or risky, nonetheless there are several studies that categorize investment tools in relation to their risk levels.

Based on the definition that risky assets are those generating uncertain nominal cash flow, common stocks were noted as being the most risky investment tool, whereas time deposits as the least risky ones consistently across literature Friend and Blume ; Schlarbaum et.

On the other hand, bonds, funds, real estates held for investment purposes, foreign exchange were cited as other risky assets.

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Portfolio Management. Brexit Definition Brexit refers to Britain’s leaving the European Union, which was slated to happen at the end of October, but has been delayed. Personal Finance. Furthermore, women’s strategies, and the subsequent performance, tend to be more stable. Business Leaders. Lifestyle Advice. Contact us. She divides the female customer segment into three groups:. Bonus Issue Definition A bonus issue is an gender differences in investing of free additional shares to existing shareholders. Barbara Aigner, of Emotion Banking in Austria, believes in a specifically female customer segmentation. Please share your general feedback. Abstract Refers to past research regarding gender differences in investment strategies which has pointed to two important differences: female investors appear both to be more risk averse and to have less confidence in their investment decisions than male investors in equivalent circumstances. Your Practice. Related Articles. Many women are not.