The 2019 OMFIF Gender Balance Index report highlights why we strive for greater gender equality in public and private financial institutions. Diversity, whether based on gender, race, educational backgrounds or other categories tends to underpin different perspectives, ways of working and attitudes to risk and uncertainty. The IMF adds that gender inequality “at the top” may have an impact further down, with those institutions and organisations embracing diversity, ultimately, benefitting financially – this is also known as the business case for gender equality.
The financial sector in society
There is, however, a deeper argument to be made. A narrow pool of experience and expertise among decision-makers and employees in global, regional and national financial institutions has produced a narrow set of objectives and affects how society views the priorities of the financial sector. This is particularly the case since the global financial crisis, which many see as a (missed) opportunity to redefine the role of finance in society.
Indeed, following John McFarlane, CEO of Barclays, “a company needs to stand for something more than making money. Sustainability matters more than profit. The mission should be a lasting contribution to society that finds a balance between all stakeholders”.
Some have argued that the financial sector has embraced change, although the broader public remains unconvinced.
A recent poll of the UK public found that two thirds do not trust banks to work in the best interest of society.
One explanation for why it has been so difficult to reorient finance to serve society (or at least why perceptions have remained so entrenched in this regard) relates precisely to the lack of substantive gender and other diversity within the workforce of the financial sector.
Slow progress towards diversity
This then leads us to ask – why has progress in getting women into senior roles in the financial sector been so slow? No doubt issues of the glass ceiling and the leaky pipeline (a progressive disappearance of women as they advance in the career) – as well as the lack of role models in the sector – need to be addressed.
The Economics profession, in 2019, is also waking up to its #MeToo moment, on the back of recent research highlighting a masculine culture within Economics and Finance.
However, academic economists are aware that society’s perception and/or reality of the role of cultures within Economics and Finance are instrumental in determining at an early stage the direction of women and girls’ education and careers. While topics such as applied micro-economics and development economics are favoured by female students and researchers, this contrasts with male-dominance in the fields of finance and macroeconomics.
This therefore calls for solutions that address this skew at early stages of women and girls’ choices. Three aspects require our attention:
- Who teaches in these male-dominated fields? As much as we need female role models within the financial sector itself, we also need female teachers and academics leading the delivery of finance and macroeconomics courses at universities.
- How are these subjects taught? We need to ensure that the social and public dimensions to these subject areas are brought to the fore. At SOAS we call this Real World Economics.
- Linking universities with large cohorts of female students (as well as those with diverse other backgrounds currently under-represented in the financial sector) with public and private financial institutions.
Within the sector itself, it would be significant if financial institutions – particularly public institutions – could demonstrate broader social relevance. This would attract individuals with different goals and motivations into the sector. This is perhaps the most difficult to achieve, as it requires fresh ideas and voices to join the conversation. An important starting point on this journey is transparency and recognition that there is indeed a problem. This is why OMFIF’s GBI serves a crucial role, shining a light on finance’s ‘missing women’.
This year SOAS has linked up with Official Monetary and Financial Institutions Forum (OMFIF), an independent think tank for central banking, economic policy and public investment, for the launch of their sixth Gender Balance Index Report. This report tracks the presence of men and women in senior positions at central banks, sovereign funds and public pension funds.