Gender Bias In The Financial Industry Comes From The Top

Kevin Drum highlights a research paper from the National Bureau of Economic Research which clearly shows how women are discriminated against in the financial industry. Whether they engage in misconduct or not, women are much more likely than men to be fired and find it harder to find a job afterward.

According to the report, “While male advisers are more than two times as likely to engage in misconduct, female advisers are 20% more likely to be fired for engaging in misconduct. Female advisers are also 30% less likely to find new employment and face longer unemployment spells as a result of misconduct”. Not only are men twice as likely to commit misconduct, they are also twice as likely to be repeat offenders and their misconduct is usually far costlier than women.

But even women who engage in no misconduct have a shorter life span at an individual firm than men. Drum kindly provides us with this graph to illustrate.

Interestingly, women are far more likely to be accused of misconduct by their own firm. Again, according to the report, “For male advisers, 55% of misconduct complaints are initiated by customers, and 28% by their employers. For female advisers, employer-initiated instances of misconduct are almost as frequent as those initiated by consumers, 41% versus 44%. These results suggest that employers may be the primary source of gender discrimination, and are consistent with the recent survey evidence which suggests that a large majority of women believe there is gender discrimination within firms”.

The report concludes that this gender bias comes from the top in these financial firms. According to the NBER, “Female advisers at firms with no female representation at the executive/ownership level are 42% more likely to experience job separation than male advisers at the same branch following an incidence of misconduct. On the other hand, firms with equal representation of male and female executives/owners discipline male and female advisers at similar rates. We find similar differences between these firms when it comes to hiring advisers with misconduct records.”

I would also venture to guess, although the NBER does not confirm, that when men engage in misconduct it is viewed by management as being in the pursuit of higher productivity or more assets under management for the firm. For the company, male misconduct is almost indicative of an aggressive, productive employee, which is why it is tolerated. Since women are just as likely to be charged with misconduct by the firm as opposed to a client, it is probably a sign that the firm is trying to “get rid” of them as they are not “productive”. In other words, women are too ethical for the financial industry.

And one final note. Looking at this report, can you doubt that misogyny was a real factor in last year’s election?