Securing the Future of the Financial Industry through Improved Gender Diversity

Abstract

Unlike any of its predecessors, the 2007 – 2009 financial crisis drew attention to the lack of diversity at the top of the finance industry. In particular, it ignited the debate on whether greater gender diversity could have impacted the course of events surrounding or even prevented the crisis. However, despite empirical evidence for a business case in (leadership) diversity as well as regulatory pressure, for example by the UK government, financial services continues to be an industry that is governed almost exclusively by an elite, male minority. The interdisciplinary approach adopted in this paper seeks to move beyond the business case logic by combining insights from financial geography and feminist theory. This paper unpacks work cultures and practices in the financial centres of London and Frankfurt. Exploring the institutional and cultural setting in which financial companies operate, we seek to answer the question of how (gender) diversity can become core to business in finance from a new perspective. The analysis is based upon a desk-based review of diversity policies of financial companies as well as data collected through 52 semi-structured interviews with external and internal stakeholders in the financial centres of Germany and the United Kingdom. It shows that support from senior management is key to greater diversity, whereas the culture of an organisation is perceived as the biggest obstacle. Culture, and thus diversity, is dependent upon context. The comparative study of London and Frankfurt reveals that understandings and practices of diversity are highly location-dependant. Despite being a heavily interconnected industry, the research shows that financial services itself are more geographically diverse than assumed. Hence, cultural as well as institutional variations are central to understanding the progress – or lack thereof – of diversity within financial companies in different geographies. This has implications for the competitiveness of financial centres and make-up of financial elites. Financial companies that strive for greater diversity and for which elite labour is a key resource need to pay particular attention to the cultural and institutional framework, within which they are embedded and operate.

Keywords: Diversity, financial industry, gender, balance

JEL Classification: G21