XXVI Edition

14-15-16 December 2017"

Gender Gap in Financial Literacy: Evidence from Finland

Kalmi Panu, University of Vaasa
Lusardi Annamaria , George Washington University
Ruuskanen Olli-Pekka, Pellervo Economic Research Institute

In most countries males have a significantly higher level of financial literacy, measured by standard questionnaire, than females. One possible explanation for this finding could be traditional gender roles, where males are expected to take care of providing income for the family and making financial decisions. The Nordic countries are among the leading countries in terms of educational achievement and female participation in top societal positions. Therefore, one could reasonably make the hypothesis that gender difference in financial literacy in these countries would be rather small. Financial literacy also has a significant impact on various economic behaviors. For instance, deficient financial literacy has been one reason for not participating in the stock markets. Women are also investing less than males, and one reason for this may be differences in financial literacy. Our paper uses evidence from a Finnish national financial literacy survey that was administered in 2014. Contrary to the expectations, we find that the gender difference in favor of males is sizable. Evidence from Oaxaca decomposition suggests that it is hard to attribute the difference to standard variables used in the literature. We also study the role of gender and financial literacy in stock and mutual fund ownership. We find that in stock ownership, there is a gender difference in favor of men, which however disappears after including financial literacy controls. The impact of financial literacy itself disappears after including income and wealth controls. We also repeat the regressions for mutual funds, where we find no gender difference to start with, but we find that the effect from financial literacy is robust also to the inclusion of a large set of covariates.

Area: Financial Education

Keywords: financial literacy, stock market participation, gender differences

Paper file

University Network