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Fearless Woman: Financial Literacy and Stock Market Participation

Tabea Bucher-Koenen, Rob Alessie, Annamaria Lusardi () and Maarten van Rooij ()

No 21-015, ZEW Discussion Papers from ZEW - Leibniz Centre for European Economic Research

Abstract: Women are less financially literate than men. It is unclear whether this gap reflects a lack of knowledge or, rather, a lack of confidence. Our survey experiment shows that women tend to disproportionately respond 'do not know' to questions measuring financial knowledge, but when this response option is unavailable, they often choose the correct answer. We estimate a latent class model and predict the probability that respondents truly know the correct answers. We find that about one-third of the financial literacy gender gap can be explained by women's lower confidence levels. Both financial knowledge and confidence explain stock market participation.

Keywords: financial knowledge; gender gap; financial decision making; confidence; measurement error; latent class model; finite mixture model (search for similar items in EconPapers)
JEL-codes: C81 D91 G53 (search for similar items in EconPapers)
Date: 2021
New Economics Papers: this item is included in nep-cwa, nep-exp, nep-fle and nep-gen
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Working Paper: Fearless Woman: Financial Literacy and Stock Market Participation (2021) Downloads
Working Paper: Fearless Woman: Financial Literacy and Stock Market Participation (2021) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:zewdip:21015

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