New research on diversity in financial services has poked more holes through the glass ceiling currently separating the corporate banking executive from the female talent that it needs.
Elizabeth Sheedy, associate professor of financial risk management at the Macquarie University Applied Finance Centre (MAFC), will revisit the controversial Lehman Sisters Hypothesis when she presents the findings of her latest study (Diversity in Financial Risk Management: Revisiting the Lehman Sisters Hypothesis) in Sydney this week, which supports previous findings of a gender imbalance at the top of banking.
Sheedy’s work is based on banking research that examines the perceived benefits of diversity for risk management on the dimensions of gender and age. The analysis incorporates staff responses drawn from 10 banks headquartered in Australia, Canada and the UK.
“In the financial services industry diversity is an issue for ongoing debate and scrutiny. In my banking study we scrutinise the supposed benefits of diversity for risk management on the dimensions of gender and age," she said.
“We found overall women make up more than half the banking workforce, so they are very well represented in banking. But they tend to be very much clustered at the junior level."
The survey aligns across six different hierarchies. The lowest, representing front-line employees, is where women make up 70 per cent of all employees. At the other end of the scale - the most senior category in the study - women make up less than 30 per cent of employees.
The MAFC also examined the retail versus corporate banking aspects of representation, finding women are still “fairly poorly represented” in corporate banking, where they only make up 37 per cent of the workforce.
Why so low?
According to Sheedy, the language of modern corporate banking is still thick with a peculiarly dated macho accent.
“Corporate banking tends to be an area that has a more masculine culture to it, a bit more aggressive. Doing big deals. So someone involved in corporate banking is doing tough negotiations with large companies,” she said.
Sheedy told AB+F there are a number of ways of looking at the question of why women aren’t represented in senior levels of corporate banking.
“I think one reason is as a result of the selection process. When banking HR recruit for these roles, they look for staff that show mental toughness - whether they are going to be able to make it in that fairly aggressive cut and thrust," she explained.
“Maybe the selection process is a bit more biased against women, maybe people assume because the candidate is a woman she’s not able to make it in that cut and thrust. So, unless you demonstrate that toughness at the interview state, you’re probably not even going to get in the door.
“Another reason might be that perhaps some women feel uncomfortable in those sort of roles. Maybe they’re not attracted to these roles and don’t find them as appealing."
The Lehman Sisters Hypothesis relies on the research-proven fact that women are, on average, more risk averse than men. It implies that bringing more women into banks will lead to better risk management and reduce the possibility of bank failure or scandal.
The theory, popularized in the wake of the GFC, suggests well known bank failures (like the Lehman Brothers collapse) wouldn’t have happened if there were more female staff in management.
Associate Professor Sheedy who will speak later this week at the MAFC Financial Professional Series, has previously debunked the myth, saying: “The hypothesis assumes all women are risk averse, yet women themselves are a diverse bunch.”