See discussions, stats, and author profiles for this publication at: https://www.researchgate.

net/publication/309812995

Investment Behavior of Women in India

Conference Paper · November 2015

CITATIONS READS
0 2,727

2 authors, including:

Priya Kansal
Galgotias University
10 PUBLICATIONS   1 CITATION   

SEE PROFILE

Some of the authors of this publication are also working on these related projects:

Volatility in Indian Stock Market: An Unpredictable Movement View project

All content following this page was uploaded by Priya Kansal on 10 November 2016.

The user has requested enhancement of the downloaded file.

Proceedings of International conference on Business Innovation and IT organized by College of Applied Education
&Health Sciences, November 28th 2015

Investment Behavior of Women in India

Priya Kansal, Assistant Professor

Galgotias University
priya.kansal@galgotiasuniversity.edu.in

NehaZaidi, Assistant Professor

Galgotias University
neha.Zaidi@galgotiasuniversity.edu.in

Abstract:

There are number of studies which favor the existence of gender biasness in investment
patterns. Most of the studies conclude that women invest more conservatively than men (Yao,
R. & Hanna, S.D., 2005) and that the women are more risk averse (Julie R. Agnew, 2005).
Some studies also contend that women are less confident about their investment decisions
and earn less return in compare to men (Barber B and Odean T., 2001). The overall purpose of
this research is to gain knowledge about key factors that influence investment behavior and ways
these key factors impact investment decision-making processes among women. It further
explores types of educational processes and materials that can transform investment behaviors
among women.The study gives an insight about the investing pattern of women. Women are
perceived as risk aversers. So, this project aims at understanding the investment behavior of
women investors by taking their responses on various factors like risk, return etc.

Introduction:

After the global financial crisis of 2008 and 2009, the Indian financial sector has now emerged stronger.
The investments and savings are increasing in terms of volumes and number of investors. As the number
of investors is increasing, the most common discussion based on gender biasness again becomes the
interest of investors. There are number of studies, which have shown that the financial behavior of men
and women differ significantly. Women hold low risk tolerance i.e. are more risk averse than men and
also sometimes earns less returns from their investments. Except this, women invest more conservatively
their financial resources and have shows low confidence regarding theirfinancial behavior. In this paper
we are studying the investment behavior of individuals, residing in the territory of India, dividing them in
the strata of male and female with reference to their preference for investment alternative, their risk
behavior, the level of confidence regarding their financial decisions, the factors which influence their
behavior, etc.

Literature Review:

There are number of studies available, which have discussed the difference in financialbehavior of male
and female investors and the factors which influence this behavior. Researchers like Suden et al.(1998)
Julie R. Agnew (2005), Perrin (2007), Oslen and Cox(2001), Schmidt &Sevak (2006) shows that
Proceedings of International conference on Business Innovation and IT organized by College of Applied Education
&Health Sciences, November 28th 2015

women are more risk averse then men in general and this defines their choice of less risky assets in their
portfolios.

Except this, Guiso, Jappelli and Terlizzese (1996), Bajtelsmit and VanDerhei
(1997),Hariharan,Chapman and Domain (2000), Hartog, Ferrer-I-Carbonell and Jonker (2002)concluded
that males are more risk tolerant than females. Powell &Ansic (1997) find that men have significantly
higher preference for risk than women. Males prefer “riskier” investment strategies in order to achieve the
highest gains, while women select “safer” strategies that allow them avoiding the worst possible losses
[Odean (1998), Barber and Odean (2001), Benartzi and Thaler (2001), Gervais and Odean (2001), and
Daniel and Huberman (2003)]. Graham (2002) found that women have less confidence regarding their
decision related to financial issues. Fellner&Maciejovsky (2007)reveal a systematic correlation between
gender and riskattitudes. Further Fellner&Maciejovsky (2007) find that women prefer less volatile
investments and exhibit lower market activity, e.g. they submit fewer offers and engage less often in
trades.Women give a lot of priority and importance to the advices given by Financial Advisors (FA) and
depend on them for guidance than men. Female investors are more detail oriented; andwant to read more
and understand financial matters better and they ask more questions than male clients (Worley, 1998).
Jianakoplos&Bernasek (1998) test gender differences in investmentbehavior on a large data set drawn
from the Survey of Consumer Finances (CFS) 1989. The analysis reveals that single women are relatively
more risk averse than single men or married couples.

Women give a lot of priority and importance to the advices given by Financial Advisors (FA)and depend
on them for guidance than men. Female investors are more detail oriented; and want to read more and
understand financial matters better and they ask more questions than male clients (Worley, 1998).

Some studies concluded that since women earn less compare to men, they have lower wealth
accumulation and hence lower investment and saving rates [Blau&Kahn (2000), Moore &Shierholz
(2004), O’Neill (2003)].

In India there are very few studies which have presented these gender gaps. Madhusoodanan (1997)
suggested that risk tolerance serves as an illusion of control and thus overconfidence. Somasundaram
(1998) concluded that the investors of Coimbatore prefer the bank and chit fund deposits to save. Mutual
funds are the least preferred instrument for investment. Rajarajan (2003) andShobhana andJayalaxmi
(2005) bought out the fact that there is a strong association between the demographic factors and the risk
tolerance of the investors.

Sharma and Sharma (2004) pointed out that the retail investment activity in India is very low.However
the young generation of Jammu holds a positive attitude towards the stock market with moderate belief.
Rajarajen (2010) revealed that the population of Indian investors has increased in the recent years.
Similarly, the surveys organized by government bodies such as NCAER, RBI Survey talk about the
individual investor’s investment and saving behavior. In the same line, Hira and Mugenda (2000) state
that an advisor needs to understand the factors that underlie a client’sfinancial behaviors before they can
effectively advise them, and numerous studies have shown that men and women think and behave
differently when it comes to managing money.
Proceedings of International conference on Business Innovation and IT organized by College of Applied Education
&Health Sciences, November 28th 2015

However there exist some studies exist which denies the existence of any gender gap. Forexample
Schubert et al. (1999) find no influence of gender on financial decisions. Masters and Meier (1988) found
no difference in the risk taking propensity of male and female entrepreneurs.

Objective:

1. To study the relationship between marital status and risk taking attitude.
2. To identify the reaction of women investors on decreasing portfolio value.
3. To study the relationship between age group and investment philosophy.
4. To study various factors that impacts women investor while taking investment
decision.
5. To study of the knowledge base of female investors about investments and various
options available.
6. To identify the long term investment objective of women investors.
7. To study Risk Appetite of women investors.
8. To identify the preferred investment avenue by women investors.

Research Methodology:

This study is based on the responses of selected sample of 152 women investors. The data was
collected through personal interviews and convenience sampling is used.Non parametric test
Chi-square is used to test the hypotheses along with the graphical representation.

Findings and Analysis:

Following are the analysis of first three objectives:

Table: 1.1 Results of Chi- square Test

Pearson Chi- Asymp. Sig. (2-
Hypothesis Square sided) Inference
There is no significant relationship
between Marital status and Risk taking
Attitude 5.898 0.207 Null Hypothesis Accepted
There is no significant relationship
between no. of dependents and
investment amount 4.319 0.229 Null Hypothesis Accepted
There is no significant relationship
between age and investment
philosophy 1.223 0.874 Null Hypothesis Accepted
Proceedings of International conference on Business Innovation and IT organized by College of Applied Education
&Health Sciences, November 28th 2015

Interpretation: All the null hypotheses are accepted which shows that there is no significant
relationship between the various demographics such as age, marital status and no. of dependents
and the investment behavior of women.

Further, following is the analysis of data to achieve rest of the objectives:

1. Various factors that impacts women investor while taking investment decision

40
35
30 Long Term Growth
25 21 20 20 Risk
19 18
20 14 1414 14
12 Return
15 10
7 8
10 6 6 Retirement Income
4
5 0 0 1 1
Liquidity
0
1 2 3 4 5

Figure 1.1: Various factors that impacts women investor while taking investment decision

Interpretation:

Majority of the women are of the opinion that long term growth is the most important factor to
be considered while taking investment decision. Retirement income is another important factor
to be considered as with the advent of privatization and increasing private sector employees,
retirement income has also become important factor considered by women investors. Return
ranks 3 as women investors are happy with moderate return & prioritizing long term growth
more, as against the set perception.For modern women investors risk is not a very important
consideration while making investment decisions.

2. Knowledge base of female investors about investments and various options available
Proceedings of International conference on Business Innovation and IT organized by College of Applied Education
&Health Sciences, November 28th 2015

How knowledgeable are you about investing

and the various options available ?
I have no investment experience=1
I have a basic understanding about investing and have made some investment=2
I have been investing for few years in different types of assets=3
I am an experienced investor=4
4% 8%

48% 40%

Figure: 1.2 Knowledge base of female investors about investments and various options available.

Most of the women have been investing in different types of assets for some years,
while a lesser percentage have some basic understanding about investment. A very
small percentage of women have enough investment experience.
3. Long term investment objective of women investors

Which of the following statements most

correctly describes your investment
philosophy ?
I prefer to invest in safer investment=1

I am willing to tolerate some ups & down in the value overall higher returns in long run in my
investments=2
My main interest in high, long term returns and I am not concerned about short term
decreases in my investments=3

17% 17%

66%

Figure: 1.3 long term investment objective of women investors

Proceedings of International conference on Business Innovation and IT organized by College of Applied Education
&Health Sciences, November 28th 2015

Majority of the women prefer investment to yield overall high returns, so they cannot be
considered conservation in their investment approaches, and can be said as moderate investors. It
can also be seen from the graph that relatively lesser 17 % of the women are aggressive investors
& same percentage of women investors prefer investing in safer investment.

4. The reaction of women investors on decreasing portfolio value

What would your reaction be, If in 6 months

after placing your investments, your
portfolio decreases in value ?
Transfer your money in more secure investment options=1
You would be concerned, but would wait to see if the investments improve=2
You would leave the investments in place expecting the investments to improve=3
You would invest more funds to lower your average investment price=4

14% 17%

40% 29%

Figure 1.4 The reaction of women investors on decreasing portfolio value.

Most of the women can tolerate moderate level of risk and can wait for improvement
by leaving their portfolio’s in place. Around29% of female investors said that they
will be concerned about the decreasing value of their portfolio. 17% women said that
they will transfer their funds to safer investment options. While only 14% of the
women said that they would invest more funds to lower their average investment
price. The women of this age in not very conservative as for as investment is
concerned and is willing to take moderate level of risk.

5. Risk Appetite of women investors

Proceedings of International conference on Business Innovation and IT organized by College of Applied Education
&Health Sciences, November 28th 2015

I would like to invest in some growing

investment avenues in spite of high
risk ?
Strongly agree=1 Agree=2
Neither agree nor disagree=3 Disagree
Highly disagree=4
2%
11% 15%
10%
62%

Figure 1.5 Risk Appetite of women investors.

Majority of the females 62% showed their agreement in investing in avenues that are
growing in spite of high risk. While 15% of the female respondents are highly
optimistic an willing to take high risk in investments. Very few women investors
were found to be negative towards investing in such securities.
6. The preferred investment avenue by women investors

60
50 51 49
48 48
50 43
41 40
40 32
30
30 22 20
20 12 1
11 9
10 4 2 4 3 2
1
0

Figure:1.6 The preferred investment avenue by women investors

Interpretation: Most of the women investors prefer to invest in low to moderate risk options as
they are majorly moderate level risk takers. Most of them prefer to invest in bank deposits, post
Proceedings of International conference on Business Innovation and IT organized by College of Applied Education
&Health Sciences, November 28th 2015

office deposits, gold & Silver and Govt. Securities that are considered to be safer investment
avenues.

Conclusion:

According to the study, different demographic factors such as age, marital status and no. of
dependents do not have significant impact on investment behavior of women. The most
important criteria that is considered while investing is long term growth. For modern women
investors risk is not a very important consideration while making investment decisions.
However, a very less percentage of women have enough investment experience. Women
investors are also optimistic for their current and future investments and usually Invest in bank
deposits, post office deposits, gold & Silver and Govt. Securities that are considered to be safer
investment avenues.

References:

1. Agnew, J. (2005), Do behavioural biases vary across individuals? Evidence from individual
level 401 (k) data, Journal of Financial and Quantitative Finance, Vol.41, pp.939–962.

2. Bajtelsmit, V. L., &VanDerhei, J. A. (1997), Risk aversion and retirement incomeadequacy in

M. S. Gordon, O. S. Mitchell, & M. M. Twinney (Eds.), Positioning pensions for the twenty-first
century, Philadelphia, University of Pennsylvania Press.

3. Benartzi, Shlomo, and Richard H. Thaler, 2001, Naive Diversification Strategies inRetirement
Saving Plans, American Economic Review, Vol.91, No.1, pp. 79-98.

4. Barber B and Odean T (2001), Boys will be Boys: Gender, Overconfidence andCommon
Stock Investment, Quarterly Journal of Economics, Vol. 116, No. 2, pp 261-292.

5. Blau, F. D. and Kahn, L. M. (2000), Gender differences in Pay, Journal of

EconomicPerspectives, Vol.14, pp.75-99.

6. Daniel Dorn and HubermanGur (2003), Talk and Action: What Individual InvestorsSay and
What They Do, European Finance Association Meetings in Glasgow, December 16

7. Deb M. and Chavali K. (2009), A Study of Gender Differences in Investment Behavior, Asia
Pacific Business Review, Vol. 5, No.3, pp. 45-55

8. Fellner, G. &Maciejovsky, B. (2007), Risk attitude and market behavior: Evidence from
experimental asset markets, Journal of Economic Psychology, Vol. 28, No.3, pp.338–350.

9. Gervais S and Odean T (2001), Learning to be Overconfident, Review of FinancialStudies,

Vol. 14, No. 1, pp- 127
Proceedings of International conference on Business Innovation and IT organized by College of Applied Education
&Health Sciences, November 28th 2015

10. Graham, J., Stendardi, E., Meyers, J. and Graham, M. (2002), Gender Differences in
Investment Strategies: An Information Processing Perspective, International Journal of Bank
Marketing, Vol. 20, No.1, pp. 17-26.

11. Guiso, L., Jappelli, T., &Terlizzese, D. (1996). Income risk, borrowing Constraints,and
portfolio choice. American Economic Review, Vol.86, No.1, pp. 158-172.

12. Hariharan, G., Chapman, K. S., & Domain, D. L. (2000). Risk tolerance and asset allocations
for investors nearing retirement. Financial Services Review, Vol.9, No.2, pp. 159-170.

13. Hartog, J., Ferrer-i Carbonell, A. &Jonker, N. (2002), Linking measured risk aversionto
individual characteristics, Kyklos Vol. 55, No.1, pp. 3–26

14. Hira, T. and Mugenda, O. (2000), Gender Differences in Financial Perceptions,Behaviours

and Satisfaction, Journal of Financial Planning, Vol. 13, No. 2, pp. 86-92.

15. Jianakoplos, N. A. &Bernasek, A. (1998), Are women more risk averse?, Economic Inquiry
Vol.36, No. 4, pp. 620–630.

16. Madhusoodanan T P (1997), Risk and Return: A New Look at the Indian Stock Market,
Finance India, Vol. 11, No. 2, pp 285 - 304.

17. Masters, R., & Meier, R. (1988). Sex differences in Risk taking Propensity of Entrepreneurs.
Journal of Small Business Management, Vol.26, No.1, pp. 31-35.

18. Moore, Q., &Shierholz, H. (2004). Why did the convergence of male and female wages slow
during the 1990s? Unpublished manuscript.Michigan RetirementResearch Centre, University of
Michigan, Ann Arbor, MI.

19. National Council of Applied Economic Research (2011), How Household Invest:Evidence
from NCAER Household Survey, sponsored by Securities Exchange Board of India (SEBI).

20. ONeill, J. (2003). The gender gap in wages, circa 2000.American Economic Review,Vol.93,
No.2, pp.309-314.

21. Odean T (1998), Volume, Volatility, Price and Profit When All Traders are Above Average,
Journal of Finance, Vol. 53, No. 5, pp 1775-1798.

22. Olsen, R. A. & Cox, C. M. (2001), The influence of gender on the perception and response
to investment risk: The case of professional investors, Journal of Behavioural Finance, Vol.2, N
 Proceedings of International conference on Business Innovation and IT organized by College of Applied Education
&Health Sciences, November 28th 2015

View publication stats