Evaluating the investment behaviour of women in Arab capital markets: a case study of Saudi Arabia and Jordan

Gender has become an extremely crucial factor when examining the investment behaviour of individuals because men and women invest in stocks differently. The investment behaviours of women relative to men have been examined extensively in the behavioural finance literature, mainly for comparison purposes. Women's roles in the stock market and their effect on its aggregate performance have not been explored in the behavioural finance literature, however, particularly in respect to the Arab region. This study aims to contribute towards a better understanding of the investment behaviours of Arab women (in regards to their herding behaviours, risk tolerance, confidence and investment literacy levels, along with the effect of religion on their investment behaviours). It also seeks to highlight the investment barriers facing Arab women and to indicate the factors that might motivate them to participate more in the stock market. Furthermore, it examines the direction and the strength of the linear association between Arab women investors and stock market aggregate performance (measured by the return on its major index) relative to Arab men. In another word, the study investigates whether the participation of Arab women in stock market is positively associated with its aggregate performance. In order to achieve the study's main aims, the researcher used a range of quantitative statistical methods (non-parametric tests along with regression and correlation analysis) to analyse both primary and secondary data. To examine Arab women investment behaviours together with the barriers and motives for investment, the researcher distributed close-ended online questionnaires to a sample of Arab male and female individual investors, or those interested in investing in stocks in both Saudi Arabia and Jordan. In addition, to investigate the relationship between women and the stock market performance, the researcher used statistical data on the numbers of Saudi and Jordanian female and male investors trading in the Saudi and Jordanian stock markets, along with data on the yearly returns of the major indices of the two stock markets from 2008-2015. The analysis of the 549 questionnaire respondents revealed the main investment barriers to be the fear of taking a high risk and of losing, suggesting that women are risk averse investors when trading stocks. Furthermore, the main investment motives were cited as the facilitation of more online trading and more reliance on financial advisors /reports. These findings also show that Arab women exhibit herding behaviour more and have lower investment literacy, confidence, IV and financial risk tolerance levels than Arab men. Consequently, they invest less in the stock market than Arab men. Moreover, the findings unexpectedly show that religion has no impact on the sample Arab women's investment behaviours. In regards to women's relationship with the stock market performance, the findings show that Jordanian and Saudi women have a positive (but not statistically significant) relationship with the performance of the Jordanian and Saudi stock markets relative to their male counterparts. This study presents three novel and stimulating findings that add to the behavioural finance literature. First, women from emerging markets have similar investment behaviours as women from developed markets. When it comes to investment in stocks, women around the world behave similarly although they may have different cultures. Furthermore, female investors may increase their participation in the stock market if barriers to investment are eliminated and their specific investment motives are supported. Finally, and notably, female investors can probably have a positive, strong and significant relationship with the performance of the stock market due to their more rational behaviours than male investors. Consequently, this study extends and diversifies the literature on gender differences in investment behaviour to include Arab women investors. More importantly, it opens the door for new areas of research in the behavioural finance field to investigate the role of female investors in the stock market in developed and emerging markets, during both bull and bear markets.