Women In Finance Research Articles

Gender disparities among financial entrepreneurs: The case of hedge funds

ABSTRACT Hedge funds (HFs) operate as small and medium-sized enterprises and are managed by entrepreneurs. When it comes to gender, the HF industry is among the most unequal sectors. International associations tried to reduce this gap by creating entrepreneurial ecosystems tailored to women in finance. Such initiatives are ineffective if quality is not present. The market is quick to assess who will survive and who will not. If there is a gender gap, we must first assess whether it comes from differences in performance. Our results indicate that this is not the case, at least for equity HFs with global investment focus. Sociocultural factors are more likely the reason. Our findings should encourage women in finance to break sociocultural barriers and take on leadership responsibilities. Efforts should focus on encouraging women to join the finance industry at the earliest career stages. Efficient capital markets will then select the best managers, regardless of their gender.

Women in Finance: Advice from Female Finance Executives

Women in the finance industry create a needed balance for corporations that can improve firm outcomes. Even with this knowledge, women are still underrepresented in the finance industry. This study is about the factors that lead women into the finance industry and those that discourage them from a career in finance. Interviews with ten women currently working in different sectors of the finance industry uncover the motives that lead them to careers in finance and areas that need to be addressed to encourage more women to choose finance as a college major and a career.

Do Female Fund Managers outperform their Male Counterparts? A Quantitative Analysis of UK Retail Funds

Abstract Why are there so few women in finance and even fewer managing funds? There is a major discrepancy between the number of female and male fund managers worldwide. The aim of this paper is to ascertain if gender is a contributing factor to fund managers’ performance. This is examined through analysis of data from 2012-2022 attained from eight major IA sectors of funds (Asian, European, North American, UK All Companies and UK Income equity funds; Targeted Absolute Return, Sterling Corporate Bond and 40-85 Sector funds) which are available to UK retail investors. This paper aims to compare the performance of all funds in the data pool with funds that involve one or more female managers through a quantitative and qualitative analysis. There is no significant research on the performance of women fund managers for UK investors. The authors intend to fill this gap with this paper. We find that funds managed by women or mixed teams produce similar and sometimes better risk-adjusted returns than male-only managed funds but are few in numbers and find it difficult to raise significant amounts of assets. JEL classification numbers: D61, G11, G14, J16, M14. Keywords: Gender, Investment, Asset Management, Wealth, Diversity.

Gender quotas and bank risk

We assess the effects of board gender quota laws using a sample of banks from 39 countries. We document an increase in both stand-alone and systemic risk post-quota among banks that did not meet the quota pre-reform; the effect is stronger for banks in countries with a smaller pool of women in finance and low gender equality. We find that the propagation of poor governance practices by overlapping female directors and deterioration in the information environment post quota are likely channels driving the results. The evidence is consistent with some banks “gaming” the reform by strategically appointing insiders, which weakens the board's monitoring function. Our results have policy implications and suggest that supply-side factors are key determinants of the outcome of mandated quotas.

Empowering Women in Finance through Developing Girls' Financial Literacy Skills in the United States.

This study examines the effectiveness of a financial literacy program, Invest in Girls (IIG), in promoting financial capability among high school girls. Using a quasi-experimental separate-samples pretest-posttest design and a longitudinal qualitative study, the study aims to assess the program efficacy and investigate the perspectives of the female students on its impact on their knowledge, behavior, and future goals and aspirations. The results indicated that the participants had significantly higher confidence for engaging in financial literacy after the program. The findings from the longitudinal study also suggested that that the program was influencing the students in positive ways, increasing their financial capability and leading them to consider wide occupational pathways available in finance. Given the lack of female leaders in the world of finance, the IIG program aims to address gender disparity in financial knowledge and highlight the importance of building financial literacy skills among girls.

Do ethical perceptions help explain under-representation of women in investment management? A comparison of students from the U.S. and China

Gender participation rates are very low for women in finance, particularly in investment management. Traditional explanations for gender disparity fail to explain consistently poor results in finance, but improving participation for similarly competitive fields such as law, medicine or STEM. However, evidence also suggests a negative perception of ethics in the finance profession. We propose that women may be particularly sensitive to these ethical perceptions, leading them to avoid finance careers. We survey college students about investment management ethics across the U.S. and China. Our results suggest women in the U.S. (China) tend to have pessimistic (optimistic) ethical views of investment management, compared to their male counterparts. Also, Chinese women have significantly more positive views of ethics in the investment management industry than U.S. women, while Chinese and U.S. men portray similar opinions. These findings may help explain why gender participation in investment management is highly-skewed toward men in the U.S., but more balanced in China. These results highlight that reinforcing ethical behaviors could help enhance broader participation in investment management careers in the U.S.

Diversity and women in finance: Challenges and future perspectives

This paper explores the main forces impacting diversity and the role of women at senior management and board level in finance. In addition, it offers a synopsis of selected research examining the board composition, corporate social responsibility and external corporate governance. We focus mainly on empirical papers that employ quasi-natural experiments and textual analysis to confirm the interdisciplinary nature of diversity. Further, we identify priorities for future research that can advance our understanding on this research area, and the broader field of financial studies, encompassing the growing interest in the boundaries between the economic, the psychological and the social.

Women in Finance: An Investigation of Factors Impacting Career Choice

Literature indicates that firms and individuals would benefit if more women pursued, and persisted in, a career in finance. Given that, why are there consistently low numbers of women studying and working in finance? More research is needed as to the nature and causes of low female participation in the field of finance. Specifically, this paper investigated the impact female faculty members had on the enrollment of female undergraduate finance majors. A weak positive correlation between numbers of female faculty and female undergraduate enrollment in finance existed. Future research may include impact of recruiting for STEM fields prior to college.

Penalties for Unexpected Behavior: Double Standards for Women in Finance

ABSTRACT We present 179 investment professionals with a scenario that manipulates whether a male or female analyst persists in pitching a stock pick after it has been voted down. Respondents evaluate analysts as less promotable when they do not persist, but only if the analyst is female. Results are consistent with categorization theory, which suggests that evaluators rely on stereotypes to interpret unexpected behaviors. In male-dominated settings, the same unexpected behavior may be perceived as evidence of a “lack of fit” in evaluations of women, but nondiagnostic in evaluations of men. Analysis of free-response questions confirm that the unexpected behavior was a predominant focus in performance evaluations of women, but not for men. Semi-structured interviews with 13 senior investment professionals provide additional support for the role of expectations and categorization heuristics on promotion decisions. Our findings shed light on factors that may contribute to the investment industry's “leaky pipeline” for women. JEL Classifications: M40; M41; M49; M51. Data Availability: Contact the authors.

Women in finance: beyond the ‘glass ceiling’

Achieving gender balance in the financial services sector requires change at every level, argue Sarah Bates and Clare Woodman

STEM Parents and Women in Finance

“STEM parents” refers to parents who work in a science, technology, engineering, or mathematics field. Using survey data from CFA Institute members, we show that parental careers differentially affect the future career choices of girls and boys. Among CFA Institute members, women are more likely to have a STEM parent (particularly a STEM mother) than men. Relative to the base rates at which girls and boys become CFA Institute members, STEM mothers increase the girls’ rate by 48% more than the boys’ rate; STEM fathers increase the girls’ rate 29% more than the boys’ rate. Our findings are consistent with the hypothesis that early role models, particularly female role models, influence women’s choice of a finance career.

Women in Finance: A Case for Closing Gaps

Women are underrepresented at all levels of the global financial system, from depositors and borrowers to bank board members and regulators. A new study at the IMF finds that greater inclusion of women as users, providers, and regulators of financial services would have benefits beyond addressing gender inequality. Narrowing the gender gap would foster greater stability in the banking system and enhance economic growth. It could also contribute to more effective monetary and fiscal policy. New evidence suggests that greater access for women to and use of accounts for financial transactions, savings, and insurance can have both economic and societal benefits. For example, women merchants who opened a basic bank account tend to invest more in their businesses, while female-headed households often spend more on education after opening a savings account. More inclusive financial systems in turn can magnify the effectiveness of fiscal and monetary policies by broadening financial markets and the tax base. The paper also studies the large gaps between the representation of men and women in leadership positions in banks and in banking-supervision agencies worldwide. It finds that, shockingly, women accounted for less than 2 percent of financial institutions’ chief executive officers and less than 20 percent of executive board members. The 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 appears associated with greater financial resilience. This study also finds that a higher share of women on boards of banking-supervision agencies is associated with greater bank stability. This evidence strengthens the case for closing the gender gaps in leadership positions in finance.

Securitizing Women: Gender, Precaution, and Risk in Indian Finance

In 2013, the government of India announced the creation of the Bharatiya Mahila Bank (BMB), or the Indian Women’s Bank, offering financial services largely to women. The bank was a financialized response to the 2012 New Delhi rape case that mobilized mass protests against sexual violence and harassment in public spaces. Curtailing economic instability in the wake of the protests, the BMB became a means of securitizing women’s bodies through financial means. While the BMB was premised on an idea of precautious empowerment through financial inclusion, India offers a challenge to the almost global dominance of men in the upper echelons of finance. With around 40 percent of financial assets controlled by women-headed banks, Indian women have challenged the naturalization of men in finance. Their rise has been supported by a history of social banking and unionization of bank workers. Examining these two cases laterally, this article argues that both narratives of women in finance in India hinge on the notion of precaution. I argue that banking for women and women bankers stabilize the economic order under financialization rather than challenging the conservatism of patriarchal capitalism and the gendered production of public space.

Women in Finance

The aim of the article is to present selected research related to diversity at the economic level, with particular emphasis on the situation of women in Poland against the background of international and European indicators, and also to show an analysis of women’s approach to investment products.

STEM Parents and Women in Finance

We show parental careers differentially affect the future career choices of girls and boys using survey data from CFA Institute members. Among CFA Institute members, women are more likely to have a STEM parent (particularly a STEM mother) than men. Relative to the base rates at which girls and boys become CFA Institute members, STEM mothers increase the girls’ rate by 48% more than the boys’ rate; STEM fathers increase the girls’ rate 29% more than the boys’ rate. Our findings are consistent with the hypothesis that early role models, particularly female role models, influence women’s choice of finance careers.

Gender, Parental Status, and the Wage Premium in Finance.

Previous research documents a growing wage premium for elite financial workers since the 1980s. A second line of research finds substantial gender disparities in earnings and career mobility among elite financial workers. Yet little is known about whether women in finance still receive a wage premium compared with their nonfinance counterparts. In addition, few studies examine whether similar gender disparities exist among nonelite financial workers. This article examines how the wage premium for working in the financial sector varies by gender and parental status across the wage distribution. We report that women earn a greater wage premium than men in low-wage financial jobs, while almost all of the increase in wages in high finance is captured by elite men, particularly fathers. Consequently, the financial sector simultaneously exacerbates and mitigates gender inequalities at different locations of the labor market. Our findings highlight the significance of institutional context in amplifying and attenuating the reward and penalty associated with gender and parental status.

Women in Finance

Across countries, banks have less gender diverse boards than other firms. Bank board diversity is particularly low in countries with greater gender gaps in PISA math scores and lower average math scores. We find similar results using state-level NAEP math scores in the United States. The influence of math scores appears to transcend standard cultural explanations. Female directors are more likely to have an MBA in banks, especially in countries with greater gender gaps in math scores. Our evidence suggests that differences in educational outcomes for boys and girls may have long-lasting implications for their career development.

Family, Values, and Women in Finance

About 18% of Chartered Financial Analyst (CFA) members are women, which is well below the percentage of workers who are women around the world. To gain insights into why women represent a relatively low percentage of investment professionals, we survey the 2016 CFA membership, which consists of about 135,000 members in 151 countries. We document that female CFA members are less tradition and conformity-oriented and more achievement-oriented than both male CFA members and women in the general population. This suggests that gender-specific barriers discourage women from entering the CFA professions. One possible barrier is that finance is a profession that disproportionately rewards those who work long and inflexible hours. Women face greater time obligations outside of work. Thus female CFA members express a stronger desire to recapture time from work than male CFA members. Woman CFA members desire more time outside of work when they are married, have children, or are older and value tradition. In sharp contrast to these results, family circumstances and valuing tradition do not affect male CFA members’ desire for more time.

Disappearing women: Why do women leave senior roles in finance? Further evidence

This paper builds on the findings of the author (published in this issue) in terms of understanding what leads women to leave senior roles in Finance. Using mixed methods techniques, a survey of 90 women suggests women leave due to the interplay of a trigger for leaving, coupled with having choice. The trigger appears to be a combination of work frustrations and personal triggers. While triggers lead women to want to leave, having the ability to leave appears important to actually leaving. The quantitative results support the qualitative findings. They suggest the way work is structured in the industry, seeking change and having choice are important factors in a woman’s decision to leave. For women who left the industry, feeling they had achieved all they wanted to from the job, feeling there is more to life than their job and having financial security may play a key role in the choice to leave. Senior women in Finance have many options outside their job – perhaps women leave senior roles simply because they can.

Stereotype Threat Among Women in Finance

Because women are in the minority in masculine fields like finance and banking, women in these fields may experience stereotype threat or the concern about being negatively stereotyped in their workplace. Research demonstrates that stereotype threat among women in management and accounting leads to negative job attitudes and intentions to quit via its effects on identity separation, or the perception that one’s gender identity is incompatible with one’s work identity. The current work extends this research to related outcomes among women in finance. In this study, 512 women working in finance completed a survey about their work environment, their well-being at work, and whether they would recommend the field of finance to younger women. Results showed that, to the extent women experienced stereotype threat in their work environment, they reported diminished well-being at work and were less likely to recommend their field to other women, and these outcomes were mediated by identity separation. Recruitment and retention of women into fields where they have been historically underrepresented is key to achieving the “critical mass” of women necessary to reduce perceptions of tokenism as well as stereotyping and devaluing of women. The current work sheds light on psychological factors that affect these outcomes.