Would more female CEOs have prevented the financial crisis?

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The financial world of the City (in London) and Wall Street (in New York) are typically male-dominated zones, where very
few women have been able to break through the glass ceiling and ascend the corporate ladder. The New York Times columnist, Nicholas D. Kristof, has argued recently that the financial crisis may have been avoided if more women were at the decision-making helm. Kristof's arguments echoes other criticisms made of the great risks taken by traders and bankers, most of them male, which would not have been taken presumably by women. Reporting from the World Economic Forum in Davos (January 2009), Kristof reflected on "whether we would be in the same mess today if Lehman Brothers had been Lehman Sisters. The consensus ... is that the optimal bank would have been Lehman Brothers and Sisters."

Biological Differences - the role of Testerone in decision-making

A Cambridge study analysed the saliva of London male traders to investigate the relationship between testerone levels and risky decision-making. The study found that a trader’s morning testosterone level predicts his day’s profitability. The researchers found that a trader’s cortisol rises with the volatility of his trading results and of the market. The results suggest that higher testosterone may contribute to economic return, whereas cortisol is increased by risk. Testosterone and cortisol are known to have cognitive and behavioral effects, so if the acutely elevated steroids observed were to persist or increase as volatility rises, they may shift risk preferences and even affect a trader’s ability to engage in rational choice. In other words, during a financial crisis, a male trader may make decisions that are not logical but risky and irrational.

The role of evolution in competitive male behaviour

Another study cited in Kristof's article published in the Journal of Evolution and Human Behavior, found that men were more influenced by their peers when making risky bets whereas women were not affected at all by peer pressure. They target evolution as a possible cause for this gender difference: "across cultures, women prefer high-status men, while a woman’s reproductive prospects depend much less on her social status. Thus, when men of similar status gather, they jockey for an edge and jostle for the alpha role — and try to get ahead with high-stakes gambles."


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