Women in Finance: An Economic Case for Gender Equality

IMF Blog, September 19, 2018

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Women are underrepresented at all levels of the global financial system, from depositors and borrowers to bank board members and regulators.
Greater inclusion of women as users, providers, and regulators of financial services would have benefits beyond addressing gender inequality: it would foster greater stability in the banking system, enhance economic growth, and contribute to more effective monetary and fiscal policy.
The blog post is the first in a series stemming from the IMF’s research on gender; posts on technology and productivity will follow.

Women on average accounted for just 40 percent of bank depositors and borrowers in 2016, according to IMF survey results published this year.
Regional examples illustrating variation:
- Women accounted for 51 percent of borrowers in Brazil.
- Women accounted for only 8 percent of borrowers in Pakistan.
Empirical examples of benefits from increased financial inclusion:
- In Kenya, women merchants who opened a basic bank account invested more in their businesses.
- Female-headed households in Nepal spent more on education after opening a savings account.
Leadership representation in banks and supervision:
- Women accounted for less than 2 percent of financial institutions’ chief executive officers.
- Women accounted for less than 20 percent of executive board members.
- The proportion of women on the boards of banking-supervision agencies was just 17 percent on average in 2015.
Regional distribution of female banking executives:
- Sub-Saharan African countries had the highest shares of female banking executives.
- Latin America and the Caribbean had the lowest shares.
- Advanced economies were in the middle.
Relationship with bank stability:
- Banks with higher shares of women board members had higher capital buffers, a lower proportion of nonperforming loans, and greater resistance to stress.
- A similar relationship was found between bank stability and the presence of women on banking regulatory boards.

Four possible reasons why a higher share of women on bank and supervisory boards may contribute to financial stability:
- Women may be better risk managers than men;
- Discriminatory hiring practices may mean that the few women who do make it to the top are better qualified or more experienced than their male counterparts.
- More women on boards contributes to diversity of thought, which leads to better decisions; and
- Institutions that tend to attract and select women in top positions may be better-managed in the first place.
The authors find that the observed higher stability is most likely due to:
- The beneficial effects of greater diversity of views on boards, and
- Discriminatory hiring practices that lead to hiring better qualified or more experienced women than men.

The findings strengthen the case for financial inclusion of women to enhance economic growth and foster financial stability.
More inclusive financial systems can magnify the effectiveness of fiscal and monetary policies by broadening financial markets and the tax base.
The authors call for more research and better data to:
- Explain how to achieve these benefits, and
- Identify the conditions that facilitate the entry of women into leadership roles in banks and supervisory agencies.

Martin Čihák, Ratna Sahay; September 19, 2018 — Women in Finance: An Economic Case for Gender Equality

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