Risk, gender, and digital finance

Financial transactions inherently involve risk, and women are often perceived as more risk-averse than men. Digital financial transactions introduce additional risks, prompting the question: does the adoption and use of digital financial technologies widen gender disparities? China, a global leader in digital financial services (DFS), provides a compelling context, with over 90 % of urban households utilizing mobile devices for a range of financial activities. This study examines the relationship between risk tolerance and DFS usage among men and women, drawing on data from 1126 Chinese respondents. Two-stage least squares (IV-2SLS) models with an instrumental variable approach are used to address potential endogeneity between risk tolerance and DFS usage. Surprisingly, the findings reveal that women, despite being more risk-averse, are as likely as—or even more likely than—men to engage in digital financial transactions. This trend can be explained by cultural expectations for women to manage both household and income-generating responsibilities, as well as their increased bargaining power within households. These findings have significant implications for researchers and financial professionals seeking to understand the role between risk tolerance and fintech adoption, particularly in societies where women play a key role in household financial management.