Gender Gap In Financial Literacy Research Articles

Financial literacy and risk-taking behavior: a study of graduates and undergraduates

PurposeThis study examines the relationship between financial literacy and risk-taking behavior in the stock market for both graduates and undergraduates.Design/methodology/approachThis study conducted two surveys on two groups: graduates and undergraduates. The questionnaires were sent to the two groups via “Google Form”. The surveys were undertaken from March to October 2021, with final data on 500 undergraduates and 400 graduates. The three techniques used are multiple linear regression (MLR), structural equation model (SEM) and ordinal logit regression (OLR) to examine the causal relationships.FindingsBased on survey data on 400 graduate and 500 undergraduate students, our results show that financial literacy is positively associated with risk-taking behavior (i.e. use of debt and willingness to use debt) after controlling for demographics. Graduates with higher levels of financial literacy are more likely to use debt. Undergraduates with higher levels of financial literacy are more willing to use debt. In addition, parental education has a significant moderating effect on the association between financial literacy and debt use among undergraduate students. The results are robust compared to the alternatives.Research limitations/implicationsAlthough this study finds a positive association between financial literacy and risk-taking behavior among graduates and undergraduates, and these results are robust to the alternatives, the scope of this study is limited and only focuses on Vietnam. Hence, it needs to be expanded overseas. Next, graduates may make investment decisions based on stock prices or valuations, and as a result, the link between financial literacy and stock valuations should be investigated in subsequent research. Last but not least, further studies should also examine the digital financial literacy level of the younger generation, as it plays an important role in the digital age.Practical implicationsFirst, this study finds that higher financial literacy tends to use more debt, implying that financially literate people know how to use debt smartly to earn more profits. Second, students with higher-educated parents are less likely to use debt for stock investment, meaning that parents help students avoid possible risks while in the university. Finally, female graduates and college students all perform lower in financial literacy than their male counterparts. This can create a larger gender gap in financial literacy between women and men, particularly, in a society in which men often play the leading role in the family. As a result, it calls for policymakers, educators and parents to pay more attention to improving financial literacy among girls and women in general.Originality/valueThis study has three contributions. First, this is the first study to examine the impact of financial literacy on risk-taking behavior between two groups of graduates and undergraduates. The results show that individuals with a higher level of financial literacy are more likely to engage in risk-taking behavior (i.e. debt use) in terms of the stock market. Recent research, for example, Phung et al. (2022), examines investors’ informal debt (from families and friends), while this study investigates graduates’ debt use (from brokerage firms). Second, parental education is a significant mediator between college students’ financial literacy and debt use. The literature on parental socialization mainly documents parents’ direct influence on children’s financial knowledge and performance (Shim et al., 2010; Phung, 2023). Unlike previous research, this study finds that parental education plays a moderating role between college students’ financial literacy and their risk-taking behavior. Finally, three methods and multiple models are used to test causal relationships. The results are robust compared to the alternatives.

When Does the Gender Gap in Financial Literacy Begin?*

Research to date has failed to generate a comprehensive understanding of the source of the gender gap in financial literacy in adulthood. Using microdata from the Household, Income and Labour Dynamics in Australia (HILDA) Survey and an analysis covering four age groups (15–19, 20–24, 25–29 and 30–34), this paper suggests that the gender gap starts young and well before individuals enter adulthood. The analysis also suggests that that raw (unadjusted) gender gap likely underestimates the underlying gap. It is important to establish whether the gap begins before or after children enter school, since policy aimed at addressing it would be very different.

Question design and the gender gap in financial literacy

Many surveys have measured people's financial literacy with a standard set of questions covering interest, inflation, and investment diversification. Results from these surveys have consistently shown that women are less likely than men to answer the financial literacy questions correctly – the so-called financial literacy gender gap.

WOMEN REVOLUTIONISING MONEY?: INVESTIGATING MEANING-MAKING AND GENDER MESSAGING IN FEMALE-TO-FEMALE FINFLUENCING ON INSTAGRAM

Women were excluded from financial independence historically, causing a significant gender gap in financial literacy. Financial decision-making was based on households where women were deprived of contribution, as they were not allowed to act as the main account holder and were seen as dependents in the formal financial system. However, informal communities were formed, sharing intimate knowledge in alternative ways of personal finance. In the online Web 2.0 environments, social media platforms, namely Instagram, could serve as new forms of learning environments for financial literacy through informal peer-to-peer learning and therefore become a virtual extension of existing 'saving communities' in real life. The paper highlights the existence of a small but thriving personal finance community on Instagram and provides evidence of the volume of content related to personal finance, debt, and saving money on the platform. The emergence of female financial influencers created a sense of virtual togetherness where women felt safe to seek peer support and share personal stories. This paper proposes four-phase research using netnographic immersion journals (Kozinets, 2022), an online survey, and semi-structured interviews and will present the early findings from data collection beginning in March 2023. It proposes a networked perspective addressing technical, social, and cultural components (Selbst et al., 2019) in relation to the formation, expansion, and evolution of female financial influencing on Instagram. This study responds to the wider conference themes of revolutions by examining social barriers to seeking financial support at the intersection of feminist studies, the digital divide, and financial literacy.

Gender Gaps in Financial Literacy: Evidence from Argentina, Chile and Paraguay

Understanding why women are less financially literate than men is crucial for developing effective policies that decrease gender inequalities and improve women’s financial literacy, agency, and empowerment. Accordingly, this article adopts a multidimensional approach to measuring financial literacy in developing countries, aggregating three key components of financial literacy, namely financial behavior, financial attitude, and financial knowledge. Using data from Argentina, Chile, and Paraguay, the study finds that there are statistically significant gender differences in these countries, which is confirmed, except in the case of Chile, by an extensive econometric analysis. In turn, a traditional Oaxaca–Blinder decomposition indicates, when considering the three countries as a whole, that 56 percent of the gap can be attributed to unexplained factors, while 44 percent to differences in observable characteristics, implying that men’s rates of return on human capital components, in a broad sense, are significantly different from those experienced by women. HIGHLIGHTS A comprehensive approach to financial literacy in Argentina, Chile, and Paraguay assesses gender differences in financial behavior, financial attitude, and financial knowledge. Financial literacy is relatively low across all three countries. In Argentina and Paraguay, the gender gap in financial literacy is driven by financial knowledge. Education and income are the largest contributors to the variance in financial literacy.

Understanding the gender gap in financial literacy: The role of culture

AbstractUsing data from the 2015 China Household Financial Survey (CHFS) this paper examines the effect of culture on the gender gap in financial literacy. We exploit geographical differences in culture in China, comparing outcomes between rural and urban areas and between areas in the east and west (Shanghai and Chongqing). Using the Blinder‐Oaxaca decomposition we show that, nationally, the gender gap in financial literacy is entirely the product of differences in the way men and women acquire financial literacy. It is a result consistent with cultural effects. When considering just women in Shanghai and Chongqing we observe a raw financial literacy differential of 13% (favoring Shanghai). This gap is also the product of differences in the way financial literacy is acquired. It provides additional evidence as to the importance of culture when it comes to understanding financial literacy.

Gender and financial literacy in Ghana

PurposeThis study examines the gender gap in financial literacy in Ghana.Design/methodology/approachThis study employs primary data and probit models together with the Oaxaca-Blinder decomposition strategy.FindingsThe authors found that males are generally more financially literate than females are. The results also show that much of the gender gap in financial literacy is explained by differences in coefficients or how literacy is produced and not by differences in the demographic and socio-economic characteristics of men and women. Thus, the gap may be attributable to unobserved behavioural and psychological traits, as well as cultural and social norms regarding gender roles in financial decision-making.Practical implicationsIt is evident that further action is needed to bridge the gap between men and women with regards to financial literacy. Effective interventions may include improving women's access to financial information and education, as well as encouraging their participation in household financial decision-making and planning. In particular, less educated women need to be targeted by policy initiatives in this regard.Originality/valueThis study contributes to the scant literature on gender gap in financial literacy in developing countries.

Gender, Financial Literacy and Pension Savings*

The relationship between the gender gap in financial literacy and pension savings is examined in this paper. In Australia, individuals have considerable discretion with respect to how their pension savings are managed. We argue that financial literacy should have a positive impact on the profitability of these decisions. Analysis based on micro‐data from the Household, Income and Labour Dynamics in Australia (HILDA) Survey suggests that a sizable share of the gender gap in pension savings can be attributed to the gender gap in financial literacy. Therefore, policies aimed at improving the financial literacy of women should help improve the living standards of women in retirement.

Financial Literacy and Gender Differences: Women Choose People While Men Choose Things?

According to gender personality traits, women are more interested in people, whereas men are more interested in things. The goal of this research is to see if there is a gender gap in financial literacy and if these disparities can be explained by different areas of interest. A convenience sample of nearly a thousand responses was received in quantitative research. The findings clearly show that women have lower financial literacy than men, but there is no indication that this is due to men and women’s differing interests in people and things.

A Study of the Chinese Gender Gap in Financial Literacy

A Study of the Chinese Gender Gap in Financial Literacy

Gender differences in financial literacy: The role of stereotype threat

Understanding why women display less financial literacy than men is crucial for developing policies to reduce gender inequalities and improve women's financial behavior. In a series of studies, we investigate whether the observed gender gap in financial literacy can be identified in nonnumerical contexts, if it can be related to confidence in financial matters, and if it can be attributed to stereotype threat, which posits that inbuilt prejudices about gender and finance undermine performance among women in tasks involving finance. We utilized data from the Swedish Standardized Scholastic Aptitude Test (n = 40,662) to investigate if there is a greater difference in reading comprehension between men and women when reading about topics related to finance. Furthermore, we conducted large-scale online data collection (n = 1989), including a survey on financial vocabulary and an experiment that manipulated the salience of the financial content across conditions when assessing financial literacy. The results show that the observed gender gap in financial literacy is robust also in a nonnumerical financial contexts and that it can not be attributed to a difference in (displayed) confidence. Finally, mediation analysis showed a significant indirect effect of gender on financial literacy through financial anxiety suggesting that a stereotype threat for women in the financial domain contributes to the observed gender gap.

Financial literacy: Thai middle-class women do not lag behind

This research studies the stylized fact of a “gender gap” in that women tend to have lower financial literacy than men. Our data which samples middle-class people from Bangkok does not show a gender gap for those with at least minimum wage earnings. This result is not explained by men’s low financial literacy, nor by women’s high income and good education. Rather, country characteristics may influence finance-specific gender equality, such as Thailand’s small gender gaps in pupils’ mathematics abilities and secondary school enrollment, and women’s strong role in financial affairs. This may indicate ways to reduce the gender gap in financial literacy elsewhere.

Stereotypes in financial literacy: Evidence from PISA

We examine gender differences in financial literacy among high school students in Italy using data from the 2012 Programme for International Student Assessment (PISA). Gender differences in financial literacy are large among the young in Italy. They are present in all regions and are particularly severe in the South and the Islands. Combining the rich PISA data with a variety of other indicators, we provide a thorough analysis of the potential determinants of the gender gap in financial literacy. We find that parental background, in particular the role of mothers, matters for the financial knowledge of girls. Moreover, we show that the social and cultural environment in which girls and boys live plays a crucial role in explaining gender differences. We also show that history matters: Medieval commercial hubs and the nuclear family structure created conditions favorable to the transformation of the role of women in society, and shaped gender differences in financial literacy as well. We discuss the changes that are needed to close the gap in financial knowledge among the young.

Stereotypes in Financial Literacy: Evidence from PISA

We examine gender differences in financial literacy among high school students in Italy using data from the 2012 Programme for International Student Assessment (PISA). Gender differences in financial literacy are large among the young in Italy. They are present in all regions and are particularly severe in the South and the Islands. Combining the rich PISA data with a variety of other indicators, we provide a thorough analysis of the potential determinants of the gender gap in financial literacy. We find that parental background, in particular the role of mothers, matters for the financial knowledge of girls. Moreover, we show that the social and cultural environment in which girls and boys live plays a crucial role in explaining gender differences. We also show that history matters: Medieval commercial hubs and the nuclear family structure created conditions favorable to the transformation of the role of women in society, and shaped gender differences in financial literacy as well. Institutional subscribers to the NBER working paper series, and residents of developing countries may download this paper without additional charge at www.nber.org.

Financial Literacy and Intra-household Decision Making: Evidence from Rwanda

AbstractResearch has consistently shown that women’s involvement in household decision making positively affects household outcomes such as nutrition and education of children. Is financial literacy a determinant for women to participate in intra-household decision making? Using data on savings groups in Rwanda, we examine this relationship and show that women with higher financial literacy are more involved in financial and expenditure decisions. Instrumental variable estimations suggest a causal link. For this reason, we perform a decomposition analysis breaking down the gender gap in financial literacy into differences based on observed socio-demographic and psychological characteristics and differences in returns on these characteristics. Our results show high explanatory power by education, happiness, symptoms of depression and openness but also suggest that a substantial fraction can be explained by differences in returns. We argue that this results from a strong role of society and culture.

Gender differences in financial knowledge, attitudes, and behaviors: Accounting for socioeconomic disparities and psychological traits

AbstractA large body of international research finds a persistent gender gap in the financial literacy of women compared to men, but explanations for this gap remain a topic of active debate. In this observational study, we explore the explanatory value of psychological characteristics, in addition to demographic variables and roles in household financial decision making. We begin by documenting the expected gender differences in financial knowledge, attitudes, and behaviors, using a national survey of adult Canadians (n = 21,789) that provides population‐level estimates. Next, we contrast these results against a second Canadian survey data set (n = 3,502) where we are able to control for individual differences in psychological traits. Results of OLS regressions suggest that gender is not a significant predictor on three scales of financial capability. Decomposition analysis finds underlying differences in individual characteristics (endowments) explain the majority of the observed gender gap in financial literacy when psychological traits are included in the model.

Financial Literacy: An Intra-Household Case Study from West Bengal, India

The study is an exercise to identify the presence of intra-household gender disparities in financial literacy levels between male and female decision-makers of the family (identified as male and female household heads) using data from a primary survey conducted in 24 Parganas (North), West Bengal, India. The survey shows the existence of significant intra-household gender gap in financial literacy. We also found that the female household heads with low financial literacy use mass media less intensively. Further, the study identifies that financial literacy is low for respondents in families with low levels of income and asset. Financial literacy improves with the use of mass media and education level. Interestingly, the higher the age of respondents the less are they financially literate. JEL Classifications: D19, J16, G190

Early Causes of Financial Disquiet and the Gender Gap in Financial Literacy: Evidence from College Students in the Southeastern United States

Financial literacy, a cornerstone of family economic well-being, is surprisingly low in the United States. The literature has established that financial literacy is lower among women than among men. As sound financial decision-making among both male and female household heads is of paramount importance to well-being, we look to identify the underlying causes that may initiate and perpetuate this differential. We found that a gender-based gap in understanding develops by early college age, before individuals have had the opportunity to develop financial skills through experience or specialization in household roles. The literature indicates that women tend to underestimate their abilities relative to men, particularly in areas of math and financial decision-making. Math ability, financial confidence, and financial and math education have been found to enhance financial literacy, and so we focus on math self-efficacy as an early indicator of financial assurance and literacy. Using an ordered probit model and data from a sample of 529 college students across three institutions in the southeastern United States, we extend the current literature to find that for men, objective math ability drives financial literacy. For women, on the other hand, self-efficacy—and not objective ability—is predictive of financial literacy. Understanding the underlying causes of the gender-based financial literacy gap can inform the creation of better education, family, and cultural intervention methods by which to close this gap in financial literacy, decisions, and outcomes.

Early Causes of Financial Disquiet and the Gender Gap in Financial Literacy: Evidence from College Students in the Southeastern United States

Financial literacy, a cornerstone of family economic well-being, is surprisingly low in the United States. The literature has established that financial literacy is lower among women than among men. As sound financial decision-making among both male and female household heads is of paramount importance to well-being, we look to identify the underlying causes that may initiate and perpetuate this differential. We found that a gender-based gap in understanding develops by early college age, before individuals have had the opportunity to develop financial skills through experience or specialization in household roles. The literature indicates that women tend to underestimate their abilities relative to men, particularly in areas of math and financial decision-making. Math ability, financial confidence, and financial and math education have been found to enhance financial literacy, and so we focus on math self-efficacy as an early indicator of financial assurance and literacy. Using an ordered probit model and data from a sample of 529 college students across three institutions in the southeastern United States, we extend the current literature to find that for men, objective math ability drives financial literacy. For women, on the other hand self-efficacy — and not objective ability — is predictive of financial literacy. Understanding the underlying causes of the gender-based financial literacy gap can inform the creation of better education, family, and cultural intervention methods by which to close this gap in financial literacy, decisions, and outcomes.

Does gender matter for the use of learning opportunities? Potential explanation for the gender gap in financial literacy

Financial literacy is becoming increasingly important, in particular for adolescents since they are exposed to financial services earlier and earlier. At the same time, empirical studies indicate that male learners show higher financial literacy than women; however, other studies find significant or contrary differences between male and female learners. These partially contradictory results make it necessary to investigate such gender-specific effects in more detail. This article addresses two questions to contribute to the literature on financial literacy: first, in which financial content areas are there significant performance differences between female and male adolescents? Secondly, does the relationship between learning opportunities and financial education differ among pupils? The analyses are based on a sample of 530 secondary students from Germany. The results indicate that female students show higher test results for the financial literacy dimensions money and payments, and insurance, male students perform better regarding the dimensions savings and monetary policy. Furthermore, learning opportunities may contribute differently to the gender gaps. We contribute to the literature by investigating the important question of gender gap for five different dimensions of financial literacy and by showing that different learning opportunities play a role in the development of students’ financial literacy.