Gender Differences in Investment Behavior and Implications for Policy; Kenya Capital Markets Authority


Elias Odula Barasa ,

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Volume 11 - October 2022 (10)


A number of researches had shown that investment choice was affected by various demographic factors. An increasing number of financial studies conclude that women invest their asset portfolios more conservatively than their male counterparts. The existence of these gender differences raises important questions for public policy. Main objective the research study was analyze the gender differences in investment behavior among employees of the Kenya Capital Markets Authority. Specifically, the research study sought to ascertain whether those differences exist, establish the relationship between gender differences in income levels and investment decisions and determine the relationship between gender difference in literacy levels and investment decisions. The overconfidence theory postulates that people generally rate themselves above average in their abilities and hence overestimate their precision of knowledge relative to others. They therefore believe that they can consistently beat the market. While, the Prospect Theory states that individuals value gains and losses differently in uncertain situations (that women underweight uncertain outcomes as compared to outcomes that can be obtained with certainty, and thus become risk averse for potential gains and risk seeker for possible losses).To achieve the objective, both descriptive as the primary information data source and inferential with a targeted of about 149 employees of the Capital Markets Authority who were assumed to have had similar exposures and hence expected to behave rationally irrespective of the demographic factors. A semi- structured questionnaire was prepared to collect the required information from the respondents while data analysis was done using descriptive statistics and inferential statistics such as, cross tabulations, Chi-square, Phi and Cramers V-test.  The research study findings were evidenced that there was no difference in investment patterns in financial assets attributable to gender. Both gender considered a balance between risk and return when making investment decisions, but women are more inclined to capital preservation compared to men who prefer higher returns. there exists a weak negative relationship between Gender of the respondent and the percentage of the income invested. This was inconsistent with reviewed literature which indicated that men invest a higher percentage of their income compared to women from the data analyzed we observed that single women in the same income band invested higher percentage of their income. Similarly, it was evidenced that older married women invest more than their male counterparts. It further, revealed that there existed a positive weak relationship between the percentage of income invested in financial assets and the gender of the respondent. This implied that investors invest more in other assets compared to financial assets. However, on the investment literacy level, it was evidenced that more men than women relied on personal research and judgment to make investment decisions while most women relied on salespeople and intermediaries. The major research study findings evidenced that the respondents prefer more stable investments regardless of the gender as indicated by the high response (93.7%) preference for capital preservation. The research study recommends that targeted strategies by CMA including marketing, personalized services and investor protection measures as well as ensuring gender disaggregated data is maintained for all aspects of the capital markets to facilitate informed policy decisions. Furthermore, the Authority should strengthen the roll-out of financial education and literacy programmes to create awareness. Thus that it was evidenced that Financial literacy should commence at a young age and mainstream in the Kenya education system Curriculum with Market intermediaries needed to devise and apply gender-differentiated strategies appropriate for each gender in their investment advisory work.


Gender Differences, Investment Behavior, Implications of Policy; Kenya, and Capital Markets Authority.



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