BEYOND GENDER DIFFERENCES IN INVESTMENT DECISION-MAKING: THE ROLES OF RISK TOLERANCE AND BEHAVIOURAL BIASES

Povzetek

Financial knowledge and market conditions are not the only factors that influence investment decision-making; psychological and demographic factors as well play a role. Of them, the gender has become a major variable that influences the risk preferences and behavioural biases in financial decisions. This paper focuses on the gender differences in investment decision making especially regarding the risk tolerance, overconfidence, loss aversion, herd behaviour, and disposition effect. The study utilizes quantitative methods such as the descriptive statistics, independent sample t-tests, and regression analysis to determine statistically significant differences between male and female investors using a structured questionnaire that is administered to individual investors of different age and income groups.

According to the findings, male investors are relatively more risk-takers and overconfident and therefore trade more and prefer more volatile assets. In contrast, female investors show more loss aversion and more disposition towards long-term and security-based approaches to investment. The behaviour of herd behaviour is manifested in both groups, but the degree of this behaviour differs according to the degree of uncertainty in the market. This paper also shows that behavioural biases are moderated by financial literacy, and thus the disparity between the genders is less when the level of knowledge is similar.

A combination of behavioural finance theories and empirical analysis used in this study assist in contributing to the insight into interaction between psychological traits and gender in the portfolio choice. The implications of the findings in practice are to the financial advisors, policymakers, and investment firms to come up with gender-sensitive financial products and advisory plans. Betterment of certain financial education programs would also be beneficial in maintaining a balanced risk-taking and informed decision-making among investors and, therefore, more participatory involvement in the financial markets.