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An empirical study on gender difference in the Investment pattern of retail

Investors by R. Suyam Praba [a]

Abstract

This study aims to understand the impact of gender difference on Investment decision

making and also to determine their most preferred investment avenue. The overall purpose of

this research is to gain knowledge about key factors that influence investment behavior and the

impact of these key factors on the investment decision-making among men and women. In this

study a detailed analysis is made on the investment objective, preference, and the pattern among

men and women.

Keywords: Gender, Investment pattern, Risk profile, Financial information source, Investment

decision making, Preference, Financial dependency, Encouraging factor of Investment,

Borrowing habit

[a] R. Suyam Praba,

Ph.D Research Scholar,

Bharathiar School of Management and Entrepreneur Development,

Bharathiar University, Coimbatore, Tamil Nadu, India.

Email ID: [email protected]

Contact Number: +91 9994371430

1. Introduction:

Financial planning is an essential and inevitable in this modern era where both men and

women are employed, educated and are aware of their financial goals. There are various

investment avenues available in the market in the form of physical assets and financial assets.

They are deposits, gold, insurance, bonds, debentures, land, building, post office savings

account, provident fund, pension plans, national saving certificate, mutual funds, shares and

commodity trading. These avenues give yield and returns, which are competitive enough and are

highly required for the present economic scenario for the survival in the inflated world. The risk-

return factor is one of the important characteristics in selecting an appropriate investment

avenue.

mailto:[email protected]



2. Research Objectives:

1) To gain knowledge about key factors that influence investment behavior and impact

investment decision-making processes among men and women.

2) The study examines impact of gender differences on the attitudes towards different types

of savings and investment alternatives.

3) To prepare a comprehensive profile of savings and investment behaviour among men and

women in the context of income, expenditure and consumption patterns.

4) To obtain the risk profile of the men and women relate to their savings and investment

behaviour.

5)

3. Research Methodology

The study presents the investment perceptions between men and women. Keeping this in

mind, schedule was created among the salaried class individual who work in a Bank, NBFC,

Insurance, Mutual Fund, IT, ITES, and in Education institution. The detailed information about

household earnings, savings and investment profile, income-expenditure, financial and non-

financial asset holdings, and aspirations and decisions in investment depending on their

perceptions of various saving and investment options were obtained using a structured

questionnaire. This research has adopted descriptive research design using interview method.

The sampling techniques used for the study is Non-Probabilistic Convenience sampling method.

Since the exact population of salaried class Investors is not known exactly, the selection is left to

the researcher who is to select the sample. The study is based on the responses of 405 individuals

who are salaried income group in Coimbatore city. The data were collected through structured

questionnaire from November 2012 to April 2013. Information was collected on various aspects

of respondents’ investment behaviors, attitudes, and beliefs.



4. Analysis and Interpretation

H1o: There is no significant association between gender and risk profile of Individuals.

Table No: 1 Gender and Risk Profile

Gender Risk tolerance Profile

Total Low

Tolerance

Below

Average

Average Above Average High

Tolerance

Male No 2 14 91 84 45 236

% 0.8% 5.9% 38.6% 35.6% 19.1% 100%

Female No 0 17 93 43 16 169

% 0.0% 10.1% 55.0% 25.4% 9.5% 100%

Total No 2 31 184 127 61 405

% 0.5% 7.7% 45.4% 31.4% 15.1% 100%

From the above table No: 1, it is determined that the P value is 0.001 which is lesser than

0.05 (5% level of Significance), the null hypothesis is rejected. Therefore, there is a significant

association between gender and risk profile.19.1% of male respondents fall under high risk

tolerance profile category, whereas 55.0% of female respondents fall under average risk

tolerance profile category. Hence it is clearly evident from the above table that men are high risk

tolerant than women.

Chi-Square Tests

Value df Asymp. Sig. (2-

sided) Pearson Chi-Square 18.765

a 4 0.001

Likelihood Ratio 19.786 4 0.001

Linear-by-Linear Association 13.535 1 0.000

N of Valid Cases 405

a. 2 cells (20.0%) have expected count less than 5. The minimum expected count is 0.83.

Source: Primary



H2o: There is no significant association between gender and Characteristic of Investment

Avenues.

Table No: 2 Gender and Characteristic of Investment Avenues

Characteristic of

Investment Avenues

Male Female

Mean scores Rank Mean scores Rank

Safety 2.14 1 1.84 1

Capital appreciation 3.01 3 2.99 2

Liquidity 3.39 4 3.30 3

Income generation 2.99 2 3.42 4

Diversification 4.98 6 4.40 5

Tax benefit 4.49 5 5.04 6

Chi-Square 372.584 300.635

Asymp. Sig. 0.00 0.00

From the above table No: 2, it is determined that the p value is 0.00, which is lesser than

0.05 (5% significance level), hence the null hypothesis is rejected, therefore there is significant

association between gender and their expected characteristics in investment avenue. From the

above table it is inferred that male and female respondents have ranked safety feature as first

option and women ranked capital appreciation as second while men ranked income generation as

second rank. Tax benefit and diversification are given least rank by both the genders.

Source: Primary



H3o: There is no significant association between gender and most preferred Investment

Avenues.

Table No: 3 Gender and Most preferred Investment Avenue

Gender Most preferred Investment avenue Total

Deposit Gold Property Insurance Shares

/MF

PF/PPF

/NSC

Others

Male No 59 45 72 31 16 7 6 236

% 25.0% 19.1% 30.5% 13.1% 6.8% 3.0% 2.5% 100%

Female No 35 59 46 13 12 2 2 169

% 20.7% 34.9% 27.2% 7.7% 7.1% 1.2% 1.2% 100%

Total No 94 104 118 44 28 9 8 405

% 23.2% 25.7% 29.1% 10.9% 6.9% 2.2% 2.0% 100%

From the above table No: 3, it is determined that the p value is 0.015 is lesser than 0.05

hence the null is rejected. Therefore there is significant association between gender and the most

preferred investment avenue. The table shows that 30.5% of the male respondents prefer to

investment in property whereas 34.9% of female respondents’ most preferred investment avenue

is gold.

Chi-Square Tests

Value df Asymp. Sig. (2-sided)

Pearson Chi-Square 15.802a 6 0.015





Source: Primary



H4o: There is no significant association between gender and Age when first investment was

made

Table No: 4 Gender and Age when first investment was made

Gender Age when first investment was made Total

<20 21-25 26-30 31-35 36-40 >40

Male No 35 117 58 17 7 2 236

% 14.8% 49.6% 24.6% 7.2% 3.0% 0.8% 100%

Female No 47 88 20 13 1 0 169

% 27.8% 52.1% 11.8% 7.7% 0.6% 0.0% 100%

Total No 82 205 78 30 8 2 405

% 20.2% 50.6% 19.3% 7.4% 2.0% 0.5% 100%

From the above table No: 4, it is determined that the p value is 0.001 is lesser than 0.05,

hence the null is rejected. Therefore there is significant relationship between gender and age

when their first investment was made. It is inferred that 49.6% of male respondents’ first

investment was made when they age was between 21 to 25 years, whereas female respondents

made their first investment when they were below 20 years of age. Hence it is concluded that

women respondents plan and execute early investment than men.

Chi-Square Tests






a. 4 cells (33.3%) have expected count less than 5. The minimum expected count is .83.

Source: Primary



H5o: There is no significant association between gender and Annual Individual Income

Table No: 5 Gender and Annual Individual Income

Gender

Annual Individual Income

Total 0 -

100000

100001 -

200000

200001 -

300000

300001 -

400000

400001

-

500000

500001

-

600000

>

600000

Male No 13 62 55 28 27 19 32 236

% 5.5% 26.3% 23.3% 11.9% 11.4% 8.1% 13.6% 100%

Female No 29 59 37 24 12 2 6 169

% 17.2% 34.9% 21.9% 14.2% 7.1% 1.2% 3.6% 100%

Total No 42 121 92 52 39 21 38 405

% 10.4% 29.9% 22.7% 12.8% 9.6% 5.2% 9.4% 100%

Chi-Square Tests






a. 0 cells (.0%) have expected count less than 5. The minimum expected count is 8.76.

From the above table No: 5, it is inferred that the p value is 0.000 is lesser than 0.05

hence the null hypothesis is rejected. Therefore there is significant relationship between gender

and annual income of an Individual. It is inferred from the table no: 6, that 13.6% of male

respondents have stated that their annual income is greater than Rs 6.00 Lakhs. 34.9% of female

respondents have stated that their annual income is between Rs 1.00 and 2.00 Lakhs. Hence it is

clear that in this research the men respondents earn more than women respondents.

Source: Primary



H6o: There is no significant association between gender and Financial Dependency

Table No: 6 Gender and Financial Dependency

Gender Financial Dependency Total

Nil Low Medium High

Male No 44 36 31 125 236

% 18.6% 15.3% 13.1% 53.0% 100%

Female No 34 6 12 117 169

% 20.1% 3.6% 7.1% 69.2% 100%

Total No 78 42 43 242 405

% 19.3% 10.4% 10.6% 59.8% 100%

From the above table No: 6, it is inferred that the p value is 0.000 is lesser than 0.05,

hence the null hypothesis is rejected. Therefore there is significant relationship between gender

and individual’s financial dependency. It is inferred from the table no: 6, that 69% of female

respondents and 53% of male respondents have stated that they have high financial dependency.

It is also inferred that only 20% of female respondents are financial independent.

Chi-Square Tests







Source: Primary



H7o: There is no significant association between gender and Borrowing habit to meet

expenses

Table No: 7 Gender and Borrowing habit to meet expenses

Gender Borrowing habit to meet expenses Total

Very often Often Some times Rarely Never

Male No 8 20 73 61 54 216

% 3.7% 9.3% 33.8% 28.2% 25.0% 100%

Female No 5 8 28 50 56 147

% 3.4% 5.4% 19.0% 34.0% 38.1% 100%

Total No 13 28 101 111 110 363

% 3.6% 7.7% 27.8% 30.6% 30.3% 100%

From the above table No: 7, it is inferred that the p value is 0.006 is lesser than 0.05

hence the null is rejected. Therefore there is significant relationship between gender and

Borrowing habit to meet expenses. It is inferred that 33.8% of male respondents borrow

sometimes to meet their expenses whereas 38.1% of female respondents stated that they have

never borrowed to meet their expenses. Hence it is concluded that men borrow more to meet

their expenses compared to that of women.

Chi-Square Tests







Source: Primary



H8o: There is no significant association between gender and Encouraging factor for

Investment

Table No: 8 Gender and Encouraging factor for Investment

Gender

Encouraging factor for Investment

Total Free

Money

available

Advertisement

are attractive

Urge

to

Save

for

future

Contingency

Management

Attractive

Interest

Rates

Special

Schemes/

Offers

Male No 72 12 82 26 11 16 219

% 32.9% 5.5% 37.4% 11.9% 5.0% 7.3% 100%

Female No 35 11 75 12 11 5 149

% 23.5% 7.4% 50.3% 8.1% 7.4% 3.4% 100%

Total No 107 23 157 38 22 21 368

% 29.1% 6.3% 42.7% 10.3% 6.0% 5.7% 100%

Source: Primary

Chi-Square Tests




Linear-by-Linear Association .154 1 0.695





encouraging factor for Investment. It is evident from the Table no:8, that 32.9% of male

respondents prefer to invest only when there is free money available, whereas 50.3% of female



respondents have the urge to save for future is the major encouraging factor behind their

Investment.

H9o: There is no significant association between gender and Household investment

decision-maker

Table No: 9 Gender and Household investment decision-maker

Gender Household investment decision-maker

Total

Self Spouse Siblings Childre

n

Parent

s

In-Laws

Male No 127 30 9 8 61 1 236

% 53.8% 12.7% 3.8% 3.4% 25.8% 0.4% 100%

Female No 51 53 5 1 57 2 169

% 30.2% 31.4% 3.0% 0.6% 33.7% 1.2% 100%

Total No 178 83 14 9 118 3 405

% 44.0% 20.5% 3.5% 2.2% 29.1% 0.7% 100%



Household investment decision-maker. It is evident that 53.8% of male respondents make self-

decision on all investment decisions, whereas 33.7% of female respondents have mentioned that

their parents take all investment related decisions.

Chi-Square Tests







Source: Primary



Table No: 10 Investment pattern in various Investment avenues among men and women

Deposit Gold Property Insurance MF/Shares PF/ PPF Others

No 94 90 68 77 35 72 8 444

% 21% 20% 15% 17% 8% 16% 2% 100%

No 144 117 102 159 94 120 17 753

% 19% 16% 14% 21% 12% 16% 2% 100%

No 238 207 170 236 129 192 25 1197

% 20% 17% 14% 20% 11% 16% 2% 100%

Female

Total

Gender

Investment pattern in various Investment avenues

Total

Male

It is inferred from the above Table No.10, that 21% of male respondents have invested in

deposit and 20% have invested in gold while 21% of female respondents have invested in

insurance and 21% of female respondents have invested in deposit avenues.

Table No: 11 Gender and Financial Information Source

No % No % No %

81 37% 51 34% 132 36%

75 34% 45 30% 120 33%

71 32% 31 21% 102 28%

55 25% 45 30% 100 27%

46 21% 29 20% 75 20%

28 13% 23 16% 51 14%

27 12% 21 14% 48 13%

33 15% 14 9% 47 13%

6 3% 5 3% 11 3%

3 1% 3 2% 6 2%

4 2% 1 1% 5 1%

3 1% 0 0% 3 1%

219 100% 148 100% 367 100%

Outdoor advertisement

Others

Total

GenderFinancial Information

Source

Television

Colleagues

Financial advisor

Magazine

Mailer

FM Radio

Newspaper

Friends

Internet

Family members

Female Male Total

Source: Primary

Source: Primary



From the above Table No.11, it is inferred that 37% of female respondents gather

financial information from newspaper and 34% from their friends, while 34% of male

respondents gather financial information from newspaper and 30% from their family members

and friends each.

5. Findings:

Gender differences are significant with the willingness to take risk between men and

women. It is concluded that male investors have high tolerance in their risk profile (19.1%),

whereas the female investors are not above average in their risk profile (65%). Men (33.8%)

borrow sometimes to meet their expenses, while women (38.1%) have never borrowed to meet

their expenses. When studied on their annual income, it is evident that men earn more when

compared to women. Women (69.2%) are highly financially dependent than men. Newspaper is

the first financial information source for men and women, but the study reveals that women use

internet and read magazine more when compared to men. Men (53.8%) take self-decision on

investment in their family while women (33.7%) reveal their parents take investment decisions in

their family. Men (32.9%) have stated that they invest only when free money is available; while

women (50.3%) have stated that it the urge to save for future encourages them to invest. Both

men and women have ranked safety feature as first characteristics of any Investment avenue, and

men ranked income generation as second and women ranked capital appreciation as second

characteristics of Investment Avenue. Men (30.5%) prefer to invest in property and women

(34.9%) prefer to invest in gold, but when probed on their actual investment pattern, the study

reveals that men (21%) have invested in deposit while women (21%) have invested in insurance.

6. Limitations of the Study

1) Sample size of the study is 405 salaried educated Investors in Coimbatore city. The

sample size may not adequately represent the national market.

2) This study has not been conducted for a longer time horizon covering market ups and

downs. The state of market has a significant influence on the buying patterns and

preferences of Investors. The study was conducted during a particular period of time and

hence it will not be applicable for all periods.

3) The study being based on a survey of Investors, it includes all limitations inherent in the

questionnaire form of research.



7. Conclusion

From this research, it is evident that there is wide difference in risk attitude, preference,

selection, pre-evaluation, financial information source, reference group, financial motive,

financial planning, income level, borrowing habit, and investment decision making of both men

and women. This study includes working class respondents, who are educated and employed in

service sector. It is inferred from the study that women even though educated, and employed, but

still they are financial dependent on others. They have average risk attitude and still unable to

take self decision on Investment, either the investment decisions are done by their parents or by

their spouse. Hence women have to be equipped with more financial information and they have

to be given financial freedom to make their investment choice. Indian women’s preference to

gold is not unusual and men prefer to invest in property – physical asset. Considering the risk

appetitive of women investment avenue education has to impart by financial institutions and

NGOs by announcing special schemes to encourage their investment behavior.

8. Future Work

The influence of marriage on gender is to be probed. A comparative study on married

men and women and unmarried men and women can be done. There is a need to conduct further

research on the relation between married women and selection of Investment Avenue. The

factors influencing their investment decisions post marriage can be studied in detailed. Similar

Investment study can be repeated among non-earning women and self-employed men and

women to understand their investment pattern.



9. References

1) Jianakoplos, Nancy A., and Alexandra Bernasek. 1998. Are women more risk averse? Economic

Inquiry 36:620-630.

2) Loibl, Cäzilia, and Tahira K. Hira. 2006. A workplace and gender-related perspective on

financial planning information sources and knowledge outcomes. Financial Services Review 15

(1):21-42.

3) Lalit Mohan Kathuria and Kanika Singhania (2012),” Investment Decision Making: A Gender-

Based Study of Private Sector Bank Employees”, The IUP Journal of Behavioral Finance, Vol.

IX, No. 56 1, 2012.

4) Mittal M and Vyas R K (2007), “Demographics and Investment Choice Among Indian Investors”,

The IUP Journal of Behavioral Finance, Vol. 4, No. 4, pp. 51-65.

5) Roszkowski M J and Grable J (2005), “Gender Stereotypes in Advisors’ Clinical Judgments of

Financial Risk Tolerance: Objects in the Mirror are Closer than they Appear”, Journal of

Behavioral Finance, Vol. 6, No. 4, pp. 181-191.

6) Singh J and Chander S (2006), “Investors’ Preference for Investment in Mutual Funds: An

Empirical Evidence”, The IUP Journal of Behavioral Finance, Vol. 3, No. 1, pp. 55-70.

7) Tahira Hira, Cäzilia Loibl, (2006) “Gender Differences in Investment Behavior” Milestone 3

Report.

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