Lehman Sisters

Today the financial industry is popularly stereotyped to be masculine in nature – aggressively risk taking, fiercely competitive, motivated by self-interest and seeking short term profits.  It has made it only more natural to think that men ought to be hired to fill the positions of such a masculine industry. Women on the other hand are identified as the weaker sex being assumed as lesser competitive and lesser committed to their careers.

It is being speculated that the financial crisis arose by permitting young males to behave in an unregulated way. After the fall of Lehman Brothers, a popular question was being asked - ‘What if it had been Lehman Sisters?’ I feel that this question should be analysed through the two contrasting point of views- ‘men and women are different’ and ‘men and women are equal’.

On the onset though I would like to raise a few questions- do personal behavioural traits of the individual employees affect the overall financial industry in the first place? Towards this I feel a strong affirmative. I feel that success of financial industry is marked by the combined balance of economics, mathematics and behavioural finance. On a trading floor for example the human instincts play as pivotal role as the statistical calculations. Next, is it justified to analyse the topic in question through stereotypes? Over a large population, often when trends begin to be observed, although it is okay to analyse through the stereotypical averages it is still dangerous to suggest that an individual will have the traits of its group. So even if we were to conclude a definitive answer to our question through this approach, we still need to understand that we would be limited by the huge intra-sex variability.

Men and women are different

Having said that, I would now like to discuss the differences in the traits associated with men and women. As mentioned above, men are seen as risk taking, self-centred, competitive and impersonal. Conversely (and relatively benevolently), women are seen as risk-averse, protective, altruistic and warm. Women have also been observed to be more consistent long term investors. To a large extent men and women are hard-wired differently though evolutionary and cultural influences. It is tempting to picture that if there were to be more women in finance, it would lead to a gentler and more stable financial industry.

There are several studies that support this claim. In a 2009 article in Business Week it noted that according to the research, from January 2000 through May 31, 2009, hedge funds run by women delivered nearly double the investment performance of those managed by men. Furthermore, in 2008, during the height if the financial crisis, on an average, funds run by women were down 9.6 percent versus a a 19 percent decline in those run by men. Audur Capital, an Icelandic private equity fund wholly managed by women, is the only such fund to have made it through the crisis without a hitch. On the other hand of the spectrum, microfinance institutions (MFI) majorly turn to women to promote micro-lending. Women are assumed to use the money to advance projects while the MFIs are typically wary of what men might do with the money.

For benefiting from a large women workforce though, we would need a more supportive social environment. An industry demanding long working hours is practically a man’s world. It is ironic that in order for woman to be successful in finance today, she has to dwindle down the very qualities that mark her as feminine. Her emotional sensitivity, nurturing instincts and desire to spend more time with children and family are the very reason that is keeping her down on the Wall Street. So, to sustain a strong female workforce it is imperative to promote more women-friendly schemes like on-site company sponsored child care.

Men and women are equal

On the other side of the coin, I personally feel that innately men and women are equal and that the sex differences are widely exaggerated. Even though both set of genders may express their reactions to a situation differently, each of us is characterised by a common pool of emotions. For example, after a stressful call on the trading desk, a man may throw off the phone while a woman may resort to tearful sobs; but I feel that the inherent lust for power or the sense of responsibility are equally strong in both. Also as far as the quantitative skills are concerned both genders are equally matched. It is wrong to assume that women are only good for cleaning up the financial mess during a crisis and that men are excusable to create one.  

To conclude, the topic at hand poses a broad number of questions and to answer them we have to hypothesise a number of stereotypical assumptions. In my opinion it is unfair to quantitatively authenticate the loose qualitative popular images. But, still if we were to assume that the Wall Street were to look at both men and women as equivalent participants, certain characteristics commonly stereotyped as feminine (such as carefulness) would be encouraged industry-wide, and inappropriate male-locker-room and cowboy-type behaviours frowned upon, to the benefit of the industry and society.