Cite: Birindelli, A. P. Iannuzzi (2022), Women in Financial Services. Exploring Progress towards Gender Equality, Palgrave Macmillan, Studies in Banking and Financial Institutions, Series Editor: Philip Molyneux, London, ISBN 978-3-030-93470-5, ISBN 978-3-030-93471-2 (eBook).
The present book is divided into 11 chapters. Chapter 1 is the introduction which gives an overview of the issues addressed in the book and its structure.
Chapter 2, entitled “An overview of legal measures, voluntary rules, indexes, and certifications, concerning gender diversity in the banking industry” opens by exploring the growing attention to gender diversity in the financial system and its main drivers with an emphasis on banks. It first analyses the reasons behind the strong focus on gender diversity in this system, linked to the so-called “group-think” and the related “Lehman Sisters Hypothesis”, according to which the typical risk-inclined male behaviour and its reckless outcomes could be balanced by the more cautious/less risk-inclined behaviour of women. The chapter then outlines initiatives and legal acts aimed at disseminating the culture and practice of gender equality. Detailed reference is given to capital requirements directives (CRDs) known as CRD IV and CRD V: CRD IV deals with the criterion of diversity in its broader acceptation (in terms of gender, age, geographical origin, professional background and so on) in relation to recruitment and composition of governing bodies; CRD V deals with gender-neutral pay policies. Section 3 provides a detailed overview of the so-called “hard” gender quotas, which are compulsory by law, and the “soft” quotas, which are not compulsory by law but stem from self-regulatory initiatives. Section 4 describes requirements for disclosing information on gender diversity, with specific reference to the Global Reporting Initiative standards. The chapter closes with Section 5, which describes indexes that track the performance of companies that are committed to supporting gender equality and provides details on gender parity certifications and the Women’s Empowerment Principles, with mention of some of the financial companies involved.
Chapter 3, entitled “Women and bank performance: theoretical background and literature review”, intends to offer a comprehensive literature review of the existing research on the relationship between board gender diversity (BGD) and financial institutions’ performance. To this end, after briefly reviewing the main theories on the role of women in the decision-making process, several sections are elaborated, each devoted to analysing a specific relationship. First, empirical studies investigating the relationship between BGD and bank economic-financial performance are examined. Given the high number of these studies, they are grouped into three categories: 1) studies revealing a positive linear relationship, 2) studies supporting a non-significant, negative, or non-linear relationship between BGD and bank performance, and 3) studies focused on Microfinance Institutions (MFIs). Then, the analysis shifts to the studies that examine the associations between BGD and bank efficiency, bank CSR/environmental performance, and bank risk-taking. Finally, the chapter is closed by a section dedicated to other areas of research on bank gender diversity that have not yet been explored in depth.
Chapter 4 (“Data on female representation in banks“) aims to provide data on the presence of women in financial firms, especially banks, and the evolution of this over time, drawing on several studies conducted mainly by international and European organisations. A special focus is devoted to female board members with executive and non-executive functions, chairwomen, and female CEOs. The general trend shows both an increase in the presence of women, especially as non-executive board members, most likely due to pressures resulting from the introduction of hard gender quotas in many countries and yet a low number of female CEOs and chairs. Moreover, the data show the persistence of the low weight of women in revenue-generating roles. Despite the large differences in the data across countries, the Scandinavian countries seem to be the most oriented towards gender equality. Finally, attention is given to the “double glass ceiling” phenomenon. In this respect, studies show that despite there being a gender balance at entry levels, the relationship becomes imbalanced in middle management and even more in executive committee positions. The chapter analyses both the motivations behind this phenomenon and some supporting data.
Chapter 5, entitled “The gender pay gap in the financial sector: Where do we stand?”, addresses the issue of the gender pay gap within the financial system. To this end, it first reviews the main treaties and legal acts that formalise the principle of equal pay for men and women, from the Treaty of Rome to the main European directives. It then analyses the theoretical and empirical studies on the issue, which for the financial sector are still at an embryonic stage. The second part of the chapter focuses exclusively on the financial system, analysing the evolution of the gender pay gap over time and the differences across geographical areas and economic sectors. The assessment is performed using data collected by Eurostat and the European Banking Authority, and also provides a focus on the gender pay gap in the UK banking sector. Finally, the chapter explores the most recent laws on the gender pay gap passed in several European countries and the recent “gender neutrality principle” of banking remuneration practices. The chapter closes by proposing some actions that need to be taken by banks to close the existing gap.
Chapter 6 (“Gender diversity in the insurance industry: Progress made and next steps”) can be divided into three sections. The first shows the main evidence from the few studies conducted so far on insurance companies, underling above all a scant presence of female directors and the lack of a significant relationship between board gender diversity and corporate performance. In the second section, some data on the current presence of women in the workforce of these financial institutions, including managerial and top positions, are reported. Finally, the third section focuses on three leading insurance companies in the European market (Axa, Zurich Insurance, and Assicurazioni Generali) which are particularly attentive to gender diversity in order to highlight the progress that this sector is making towards achieving greater gender equality.
Chapter 7 (“Women in the asset management sector”) focuses on the role of the asset management (AM) industry in adopting and disseminating gender diversity principles. To this end, the chapter opens with a brief analysis of the rationale behind the importance of gender diversity in this industry and focuses on the still high barriers that women encounter and face. The second section analyses the main regulatory initiatives put in place by both European and US regulators to promote gender diversity in the asset management sector. The third section deals with the current adoption by mutual funds of investment strategies focused on the promotion of gender equality. This is followed by an overview of the main gender diversity funds that some important asset managers (Nordea, Fidelity, RobecoSAM, UBS Asset Management, and State Street Global Advisors) have chosen to place recently on the market. Finally, the chapter ends with an in-depth look at the main initiatives adopted by some AM trade associations (Investment Association, Finance Finland, and Assogestioni) aimed at encouraging AM firms to increase the uptake of gender diversity policies and standards.
Chapter 8 (“How central are women in Central Banks?”) deals with gender issues in Central Banks (CBs). In such a setting, discrimination against women and obstacles to their careers seem even more pronounced than in supervised financial intermediaries. The chapter first discusses the causes of this accentuated difficulty for women, and then reviews the scarce literature on the pattern of appointments and promotions of women on CB boards, on the relations between gender and monetary policy decisions and, finally, on the influence exerted by women on the stability of the financial system and the quality of supervision. The focus then shifts to the strengthening of the gender parity policy by the European Central Bank, marked by the setting of targets for the recruitment and promotion of women, and to women governors. In the latter regard, we have tried to build a detailed picture of the women who have held such positions in CBs around the world, highlighting both how rare they still are and how patterns change across countries. Finally, the chapter offers a picture of the gender policies followed by the EU28 CBs, based on responses Central Banks provided to our survey and/or on information retrieved from the Central Banks’ documents, especially their annual reports.
Chapter 9 (“Gender diversity in banks and insurance companies: The state of art”) is exclusively empirical. Indeed, it aims to provide an overview of the gender diversity policies adopted by banks and insurance companies across the world over the last 11 years (2010-2020) by using data collected from the database Refinitiv Eikon, namely: a) the percentage of women employees; b) the percentage of new women employees; c) the percentage of women managers; d) the percentage of female directors on the board; e) the percentage of female executive members; f) the gender pay gap; g) flexible working hour mechanisms promoting a work-life balance; h) the board gender diversity policy, and i) the support to the UN-Sustainable Development Goal (SDG) 5 Gender Equality. The full sample consists of 2,064 listed financial intermediaries (1,427 banks and 637 insurance companies, the latter belonging to the following sub-sectors: life & health Insurance, multiline insurance & brokers, property & casualty insurance, and reinsurance). Overall, the analysis shows that women are still underrepresented in managerial positions and, even more so, in executive roles in the banking and insurance sectors. However, it is important to underline that over the last 11 years there has been a rearrangement of the roles held by women in our sample. Indeed, on the one hand, the number of women employees has decreased, and on the other hand, the number of women directors, managers and executives has increased, although with very different growth rates. In any case, the rebalancing process is still ongoing and will be so for a long time.
Chapter 10 (“A case of temporary (extended) “hard quotas”: Gender diversity in Italian banks”) analyses gender diversity in Italian banks starting from the regulatory framework; first and foremost, the Golfo-Mosca Law, which was reiterated with amendments by the 2020 Budget Law. Alongside these regulations, the chapter illustrates numerous additional initiatives, such as the establishment of an Observatory that studies and promotes gender equality by the Bank of Italy, together with the Department for Equal Opportunities of the Italian Presidency of the Council of Ministers and Italian Companies and Exchange Commission (Commissione Nazionale per le Società e la Borsa, CONSOB). Another initiative is the charter by the Italian Banking Association inviting signatories to strengthen their governance following the principles of inclusiveness and equal opportunities. Not least, the proposal by the Bank of Italy, following its 2015 diversity benchmark, to introduce a gender quota in the administrative and control bodies of banks, which recently became an integral part of the provisions on corporate governance in Italian banks. The chapter ends with an analysis and commentary on the female presence and gender pay gap in Italian banks (with a focus on listed banks) based on data extrapolated from corporate governance and remuneration policies reports.
Chapter 11 (“Proposing a framework for calculating an index on gender equality in financial firms”) opens by underlining the importance of a model that allows the assessment of the gender diversity of financial firms under several analysis profiles, widely discussed in the previous chapters. We propose a model of analysis that is suitable for the construction of an index of gender diversity based on a set of items predetermined according to standards, legal acts, and best practices relevant to the topic. More specifically, the framework consists of 24 items that can be divided into four categories: 1) gender balance in governance bodies and employees; 2) policies promoting gender equality; 3) transparency of the company’s actions towards the community; and 4) equal compensation. In the case of comparison among intermediaries of the same country, the proposed framework can be integrated by considering further elements peculiar to each country. It is a first attempt to fill a gap in the gender diversity literature, where, to the best of our knowledge, there is no framework to calculate a gender equality index that goes beyond the composition of governance bodies and the gender of the board chair and/or CEO.