Boosting Growth Through Diversity in Financial Leadership

I know this is a busy day for everyone, so I’m grateful you could join us for today’s seminar on Gender Diversity Dividends in Finance. It was very important to me to come here to contribute to a discussion of this consequential issue.

Gender in finance has macroeconomic, moral and ethical implications extending across national borders, cultural chasms, and class divides. It affects women all over the world—from executives in boardrooms to women who seek education, access to financial services, and employment opportunities.

A few statistics offer a glimpse of the problem with access to financial services.

· Of the 1.7 billion people unbanked globally, nearly one billion of them are women.

· Lower access to bank credit robs women of opportunities to educate their children, start businesses, or tide over hard times.

· Across the world, fewer than 20 percent of bank and supervisory board members are women. I am sorry to say the IMF is no exception – on our Executive Board of 24 chairs, we only have 2 women, and while I am pleased to say we look forward to welcoming a third female Executive Director in a few weeks, we should do much better. It’s interesting to note that many low- and middle-income countries actually do better than advanced economies in having women in those leadership positions.

· And it will not surprise you when I report that, only 2 percent of bank CEOs worldwide are women.

There is now considerable evidence of what this inequality means. Recent IMF research shows that increasing financial inclusion, of both women and men, lifts economic growth. That research also shows that having more women in leadership positions leads to greater financial stability, lower levels of non-performing loans, and higher profits. Banks with a higher share of women on their boards were more stable in 2008, when the Global Financial Crisis hit.

One reason for this performance is clear: greater diversity means more diverse views, which helps avoid group-think and leads to better decision making.

So why don’t financial institutions put more women in these top roles? Here, too, I don’t think the explanation is going to surprise you. Women continue to face conscious and unconscious bias—cultural, religious, or just the propensity of men to hire people who are like themselves. In addition, studies have found that women are held to a higher standard of performance—with women of color facing even bigger obstacles.

Given all these challenges, it may be that the women who persevere tend to be among the most talented and skilled executives to make it to the top. I have the privilege of working for IMF Managing Director Christine Lagarde, and liaise closely with the World Bank CEO Kristalina Georgieva, so I can attest to this!

There is one more dimension to this issue; an ugly dimension: harassment and violence against women. At the economic level, it is very costly in terms of health and services, reduced productivity and lost opportunities. At the organizational level, sexual harassment cuts to the very soul of an institution, a lesson we learned in the case of our former Managing Director. And at the personal level, it is a sad fact of everyday life. Fortunately, women have forced this issue into the open—where it should be—through the #MeToo movement.

I speak for everyone at the Fund when I say that we must confront sexual harassment and stop it.

With all of that in mind, I found it disheartening to read recently about the results of a survey conducted by the American Economic Association. A shockingly large number of women economists reported being victims of sexual assault. This is criminal behavior we are talking about.

In addition, nearly half of women economists said they avoid speaking at conferences for fear of harassment or “disrespectful treatment.” This is unethical behavior.

Finally, this survey reported that 70 percent felt that male colleagues’ work was taken more seriously than their own. This must end.

Many young women aspire to join our institutions from graduate programs, but the behavior they face during their studies and early careers drives too many away from our field. That drains our intellectual capital. I applaud the AEA for putting in place sanctions against harassment and hope every economist will take a stand.

As you know, at both the World Bank and the IMF our chief economists are women. At the Fund, we have almost reached our 2020 goal of 30 percent of management positions filled by women – almost tripling the ratio from 10 years ago. I am proud of this progress. It will help to make our world a better place.

In conclusion, let me leave you with one last thought. As we work to empower women in the global economy, as we strive to make more room for them in the boardroom, let us not forget that the fight for equality and dignity should begin right here, where we live and work.