Risk attitude and capital market participation: is there a gender gap in Germany?

Abstract

Do women invest differently than men? Using the Deutsche Bundesbank Panel on Household Finances (PHF), we replicate earlier findings that participation in stocks and the conditional share held in equity are generally lower among women than among men, even when we account for risk aversion and other relevant factors. Above and beyond most previous literature, we also analyse financial wealth held in fund shares, fixed-income securities and certificates. Adjusted for controls, women hold less wealth in certificates but more in fund shares than men. We also report novel results when we decompose the raw gender gap in capital market participation rates. This gap is mainly explained by different risk attitudes and monetary endowments, but women would participate even less in the capital market if they reacted to risk aversion in the same way as their male counterparts, implying that risk-averse men may shy away from risky assets much more than similar women.

Keywords: Capital market participation, gender, risk attitude, risky assets

JEL Classification: G51, G41, G11, J16