The role of hormones in financial markets

Bose, S., Ladley, D. and Li, X. 2020. The role of hormones in financial markets. International Review of Financial Analysis. 67. doi:10.1016/j.irfa.2019.101434

TitleThe role of hormones in financial markets
TypeJournal article
AuthorsBose, S., Ladley, D. and Li, X.
Abstract

Steroid hormones, such as testosterone, have been shown to affect risk preferences in financial traders with high
levels leading to excessive risk-taking. Hormone levels, in turn, are affected by trading outcomes as well as by
gender - males are more sensitive to stimuli than females. We develop a model to investigate the effects of
hormones on financial market stability and trader performance. An increase in the proportion of female traders
does not necessarily make markets less volatile; however, it reduces the occurrence of market crashes. Male
traders on average under-perform females, although the best performing individuals are more likely to be male.

KeywordsGender Hormones; Endogenous risk preference; Market stability; Trader performance
Article number101434
JournalInternational Review of Financial Analysis
Journal citation67
ISSN1057-5219
Year2020
PublisherElsevier
Accepted author manuscript
License
CC BY-NC-ND 4.0
File Access Level
Open (open metadata and files)
Publisher's version
File Access Level
Open (open metadata and files)
Digital Object Identifier (DOI)doi:10.1016/j.irfa.2019.101434
Web address (URL)https://doi.org/10.1016/j.irfa.2019.101434
Publication dates
PublishedJan 2020

Permalink - https://westminsterresearch.westminster.ac.uk/item/qy37q/the-role-of-hormones-in-financial-markets


Restricted files

Accepted author manuscript

Under embargo until 01 Jul 2021
Under embargo until 01 Jul 2021
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