Gender differences in financial capability: What is behind the gap?

Abstract

This study examines gender differences across five measures of financial capability and identifies factors that widen or narrow the gap using a decomposition technique. Utilizing data from the 2021 National Financial Capability Study, the results indicated that females had lower levels of financial capability than males on four out of five measures, with the exception of perceived financial capability. Decomposition analyses reveal several key contributing factors to explain these gender differences in financial capability, including age, income, education, financial anxiety, risk tolerance, and financial education. This study provides important insights for financial educators, researchers, and policymakers.