Including women on the boards of banks makes them more financially stable, according to a new report by the IMF.
Called Financial Inclusion: Can it meet multiple macroeconomic goals? It shows that the higher the proportion of senior positions occupied by women, the greater the institution's “distance to distress”. A larger distance means the bank is more protected against shocks to earnings.
“In both banks and supervisory institution decision-making boards, the share of women is low,” the authors say, adding that this could have an impact on the “risk-taking behaviour of banks, on the quality of bank supervision, and ultimately on financial stability outcomes”.
There is a positive correlation between the share of women in supervisory boards in 2011 and the banking system’s average distance from distress, controlling for supervisory quality, various governance indicators, the level of financial access, GDP per capita, GDP growth and the level of nonperforming loans.
Few women at the top
Women may have a positive influence on financial stability, but the report says there is an “acute lack of women in financial governance.”
Across the world, the IMF found that less than 20 per cent of directors on boards of banks were women, and the vast majority of banks have no women on their boards at all.