Financial Risk Tolerance: Differences Between Women and Men

Sammanfattning:   The statistics has shown that men and women have different investing strategies, where men tend to choose riskier investments and women lean towards less risky investments. The financial theory states that individuals are risk averse in general, and some prior studies have shown that women are more so than men. Moreover, financial knowledge and experience have been pointed out to be one of the factors affecting one’s financial risk tolerance. This paper researches these issues by addressing the following to questions: Are there any gender differences in Financial Risk Tolerance? Does knowledge and experience have impact on Financial Risk Tolerance? A literature search has been done and relevant theory has been gathered and review, which served as a base and a framework for conducting this study. A quantitative methodological study has been carried out by handing out questionnaires, based on a 13-item Financial Risk Tolerance scale developed by Grabble & Lytton (1999). The target population was the Umeå University students. The size of the sample was 139. The findings of this paper confirm prior studies which state that women, in general, are less risk tolerant then men – female students scored lower on the Financial Risk Tolerance Score than male students. Furthermore, this study also shows that one’s Financial Risk Tolerance is affected by experience and knowledge in the field of finance – students that are studying economics had higher Financial Risk Tolerance score than students that were studying other subjects.