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Trading Stocks Builds Financial Confidence and Compresses the Gender Gap

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  • Jha, Saumitra

    (Stanford University)

  • Shayo, Moses

    (Hebrew University of Jerusalem)

Abstract

Many studies document low rates of financial literacy and suboptimal levels of participation in financial markets. These issues are particularly acute among women. Does this reflect a self-reinforcing trap? If so, can a nudge to participate in financial markets generate knowledge, confidence, and further increase informed participation? We conduct a large field experiment that enables and incentivizes working-age men and women--a challenging group to reach with standard financial training programs--to trade stocks for four to seven weeks. We provide no additional educational content. We find that trading significantly improves financial confidence, as reflected in stock market participation, objective and subjective measures of financial knowledge, and risk tolerance. These effects are especially strong among women. Participants also become more self-reliant and consult others less when making financial decisions.

Suggested Citation

  • Jha, Saumitra & Shayo, Moses, 2021. "Trading Stocks Builds Financial Confidence and Compresses the Gender Gap," Research Papers 3933, Stanford University, Graduate School of Business.
  • Handle: RePEc:ecl:stabus:3933
    DOI: 10.2139/ssrn.3174944
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