A new study published in Scientific Reports indicates that male traders, who made risky trades as a result of having high levels of the sex hormone testosterone, might be responsible for the banking crisis.

Earlier, we heard economists saying that factors such as ‘irrational exuberance’ and ‘animal spirits’ are influencing the events taking place on the trading floors in Wall Street and The City. However, now, scientists are saying that testosterone might be the key player. Here, it must be mentioned that testosterone is known for being the hormone responsible for aggressive behavior; stress hormone cortisol also has similar trait.

The simulated study showed that cortisol and testosterone can increase a trader’s chances of taking high-stake gambles.

Men with higher testosterone levels usually react more confidently when put in a competitive situation.


Levels of cortisol rise when people are under stress. An increase in the level of this hormone augments blood sugar levels providing greater energy to traders to manage ‘fight-or flight’ situations.

A research team at the Imperial College in London began the study by faking a trading floor environment. This was followed by measurement of hormone levels in participants. All the participants had to take part in a game of buying and selling properties among themselves.

Researchers found that after receiving dosages of either cortisol or testosterone, the participants started making more risky investments. According to Dr. Ed Roberts of the Imperial College, such results indicate that testosterone and cortisol can temporarily promote risky investment behavior.

Dr. Roberts added that the research team only checked the hormones’ acute effects. He feels that it would be even more fascinating if hormone levels of traders operating in real world environment are measured and possible long-term effects of the hormones are identified.

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According to the researchers conducting this new study, the traders need to work in extremely competitive environments, which might be responsible for increasing their hormone levels.

Dr. Roberts informed that the primary aim he and his colleagues have is gathering more information about the functions of these hormones. Then, they will check the work environment of the traders for finding out whether it’s too competitive or too stressful. This is because factors like excessive competition and stress in the workplace might have an impact on the hormone levels of the traders and affect their decision-making significantly.