The role of gender stereotypes and social expectations in impacting financial behaviour has been the subject of research worldwide. Women often demonstrate under-confidence in financial decision making and depend upon their male counterparts (husbands/ partners) for their investing decisions. This is not only because of differences in financial knowledge and sophistication, but also the underlying lack of self-confidence.

Stock market investment is considered a sign of financial sophistication. This is because the stock market represents unique risks and opportunities that require a certain level of self-confidence and financial knowledge. For instance, a typical stock market investor is expected to know concepts like a stock exchange, shares, equity, and debt. Even the process of creating a share trading account requires a certain minimum level of understanding.

Using this measure of financial knowledge and sophistication, a research article published in the Journal of Finance in 2021[1] investigates whether financially sophisticated women manage to break the gender norms and influence the investing behaviour of their household. Using survey data from U.S. households, they find that a household with a financially sophisticated husband shows higher stock market participation compared to one with a financially sophisticated woman. This means that the gender identity of the woman overshadows her financial expertise. Interestingly, this effect is weaker for households raised by working mothers, that have apparently lower gender norms and biases. Similarly, households with a more conservative and religious attitude to life, show stronger gender biases, reducing the investing impact of the financially sophisticated woman in that household.

Bottomline: Before we fall into the trap of believing that merely financial education and literacy for women can change their power within society, we must aspire to change social norms. Education in and of itself can bring no meaningful change, if the opinion of the woman is not heeded.  

[1] KE, D. (2021), Who Wears the Pants? Gender Identity Norms and Intrahousehold Financial Decision-Making. The Journal of Finance, 76: 1389-1425. https://doi.org/10.1111/jofi.13002