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The Role of Hormones in Financial Markets

journal contribution
posted on 16.04.2020, 14:40 by Subir Bose, Daniel Ladley, Xin Li

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.


History

Citation

International Review of Financial Analysis, 2020, Volume 67, 101434

Author affiliation

School of Business

Version

AM (Accepted Manuscript)

Published in

International Review of Financial Analysis

Volume

67

Publisher

Elsevier

issn

1057-5219

Acceptance date

02/12/2019

Copyright date

2019

Publisher version

https://www.sciencedirect.com/science/article/pii/S1057521918307890#s0055

Language

en