Women leading banks: A case for more or less stability?

They say if Lehman Brothers was Lehman Sisters, things would have been more stable not just at the firm but even for markets.

However, economists will always say but where is the evidence?

A group of IMF economists look at data and show that banks led by women are more stable:

Using a new dataset, we measure the large gap between the representation of men and women in leadership positions in banks and bank supervision agencies worldwide.

Women occupied less than 2 percent of bank CEOs positions, and less than 20 percent of the board seats in more than 80 percent of the observations across banks over time.

Contrary to common perceptions, many low- and middle-income countries have a higher share of women in bank boards and banking supervision agency boards compared to advanced economies.

Econometric analysis suggests that, controlling for relevant bank and country-specific factors, the presence of women as well as a higher share of women on bank boards is associated with greater bank stability, as represented by higher z-scores and lower nonperforming loan ratios.

We also examine the share of women on boards of banking supervision agencies by compiling a new dataset. We find that it is associated with greater bank stability. Further research is needed to identify specific mechanisms through which these stability benefits are achieved, and to understand the conditions that have facilitated entry of women into leadership roles in banks and supervision agencies.

What could be the linkages of women to bank stability?

In view of the existing literature, several possible hypotheses could be offered on how more gender-balanced boards could affect stability. These include (1) higher risk aversion in female financial executives (compared to their male peers), (2) discriminatory selection practices that result in more qualified women who make it to the board, (3) diversity in thought that might result in better financial decisions, and (4) selection bias, by which better managed—and therefore, less risky institutions—also tend to attract, select, and retain more women leaders.


Lots of regressions there which have to be interpreted carefully…

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