Academic journal article IUP Journal of Management Research

Awareness and Stock Market Participation of Women: A Comparative Study of Stock Investors and Non-Investors

Academic journal article IUP Journal of Management Research

Awareness and Stock Market Participation of Women: A Comparative Study of Stock Investors and Non-Investors

Article excerpt


The economic empowerment of women is the biggest social change in recent times (Inglis, 2012). With the change in the economic status of women, it has become critically important to enhance their financial knowledge and awareness in order to enable them to make informed financial decisions (Koenen and Ziegelmeyer, 2011). Research on financial awareness and education of women provides evidence that on average women have lower levels of financial knowledge than men. Lower level of financial awareness among women has the potential to reduce their active participation within the economy, lessening their economic power within the households, decreasing the transmission of knowledge to the next generation and worsening the existing social disparities (Hung et al., 2012). On the other hand, an increase in the awareness of women will lead to their overall development, thereby helping the nation to prosper.

As far as the impact of financial awareness on the participation of women in economic activities is concerned, stock market participation is much lower among women than men (Rooij et al., 2007). While men and women are equally not likely to invest due to lack of capital, lack of interest, income, risk aversion, educational orientation, etc., women are more likely not to invest due to the lack of awareness.

Academic researchers are of the view that financial awareness is of utmost importance to women at every stage of behavioral change in order to bring about a change in their financial behavior as shown in Table 1. The table shows that financial awareness among women enables the practical application of the Transtheoretical Model (TTM) of change, which in turn helps women to become better informed and more confident about their financial decisions. In the first stage of behavior change, i.e., the precontemplation stage, women are either uninformed or under-informed about the long-term consequences of their financial decisions or may be demoralized due to the complexity and difficulty of the financial concepts, and therefore, need to learn the basic investment concepts. During the contemplation stage, financial awareness enables them to take investment decisions by enabling them to analyze the risk and cost associated with every investment. At the preparation stage, women need to be financially aware in order to match their investment allocations with their intermediate and long-term goals. During the action and maintenance stage, financial literacy is needed to make regular investments and to avoid the risk of losing money due to overconfidence. Besides this, the TTM model also states that financial literacy prevents relapse at various stages of behavior change. A relapse might occur in a financially demanding life stage, especially in case of women where they are left with little savings and little time for dealing with investment decisions.

Traditionally, financial decision making was considered as a male prerogative where women were assigned the responsibility of managing the day-to-day affairs of the family. But the recent changes in the economic and social status of women calls for a change in the financial knowledge and awareness level of women. It is only the understanding of the awareness level of women investors in India that will help the policy makers in designing financial education and awareness programs in order to help women to actively participate in the stock market and contribute towards raising their economic potential and participation in the economy. Thus, the present study attempts to examine the level of awareness of women about the stock market and provide empirical evidence to prove that lack of awareness about the stock market is the reason for lower stock market participation of women. 4

Literature Review

Academic researchers are of the view that although the impact of lack of awareness on stock market participation is greater in the case of women, similar impact is more or less observed on all segments of investors in the stock market. …

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