Finance, Gender, and
the Ethics of Care:
ideas for human finance
Irene van Staveren, Institute of Social
Studies, member of SAC FESSUD,
Presentation at Annual FESSUD meeting, 17-20 October 2013.
Outline:
I. Gender Trends in Developing Countries
during Financial Crises
II. The Lehman Sisters Hypothesis
III. Caring Finance:
Ethics for Financial Reform
I. Gender Trends in Developing Countries
during Financial Crises
Methodology: comparative analysis,
period 1996-2005
• Crisis countries:




1997: Indonesia, Korea, Malaysia, Philippines and Thailand
1999: Brazil
2001: Argentina
2002: Turkey
• Non-crisis countries:
 India, Japan, Mongolia, Pakistan, Vietnam, Chile,
Mexico, Egypt
Change in Maternal Mortality Rate, 1996-2005
20
0
-20
Average
decline: 33
per
100,000
live births
Argentina
Brazil
Indonesia Korea, Rep.
of
Malaysia
Philippines
Thailand
Turkey
Average
-40
-60
Crisis countries
-80
Average
-100
-120
-140
-160
-180
Change in Maternal Mortality Rate, 1996-2005
50
0
Average
decline: 57
per
100,000
live births
Chile
Egypt
India
Japan
Mexico
Mongolia
Pakistan
Vietnam
Average
-50
Non-crisis countries
Average
-100
-150
-200
Change in Fem ale/Male Ratio Prim ary School Enrolm ent, 1996-2005
4.00
3.00
Average
decrease:
0.4%
2.00
1.00
0.00
-1.00
Argentina
Brazil
Indonesia
-2.00
Korea,
Rep. of
Malaysia
Philippines
Thailand
Turkey
Average
Crisis countries
Average
-3.00
-4.00
-5.00
-6.00
Change in Fem ale/Male Ratio Prim ary School Enrolm ent, 1996-2005
25.00
20.00
Average
increase:
9.7%
15.00
Non-crisis countries
10.00
Average
5.00
0.00
Chile
-5.00
Egypt
India
Japan
Mexico
Mongolia
Pakistan
Vietnam
Average
Change in Fem ale/Male Ratio Secondary School Enrolm ent, 1996-2005
16.00
14.00
12.00
Average
increase:
4.4%
10.00
8.00
Crisis countries
6.00
Average
4.00
2.00
0.00
-2.00
Argentina
Brazil
Indonesia
Korea, Rep. of
M alaysia
Philippines
Thailand
Turkey
Average
-4.00
Change in Fem ale/Male Secondary School Enrolm ent, 1996-2005
25.00
20.00
Average
increase:
10.1%
15.00
10.00
5.00
0.00
-5.00
-10.00
-15.00
-20.00
-25.00
-30.00
Non-crisis countries
Chile
Egypt
India
Japan
M exico
M ongolia
Pakistan
Vietnam
Average
Average
Change in Fem ale/Male Com pletion rate Prim ary School, 1996-2005
2.00
1.00
Average
decrease:
0.95%
0.00
Argent ina
Brazil
Indonesia
Korea, Rep. of
Malaysia
Philippines
Thailand
Turkey
Average
-1.00
-2.00
Crisis count ries
-3.00
Average
-4.00
-5.00
-6.00
-7.00
Change in Fem ale/Male Com pletion rate Prim ary School, 1996-2005
12.00
10.00
8.00
Average
increase:
3.76%
6.00
4.00
Non-crisis count ries
2.00
Average
0.00
Chile
-2.00
-4.00
-6.00
Egypt
India
Japan
Mexico
Mongolia
Pakist an
Viet nam
Average
Change in the Gender-related Developm ent Index, 1996-2005
0.12
Average
increase:
5%
0.10
0.08
0.06
Crisis count ries
0.04
Average
0.02
0.00
Argent ina
Brazil
Indonesia
Korea, Rep. of
Malaysia
Philippines
Thailand
Turkey
Average
-0.02
-0.04
Change ni the Gender-related Developm ent Index, 1996-2005
0.20
Average
increase:
11%
0.18
0.16
0.14
0.12
Non-crisis count ries
0.10
Average
0.08
0.06
0.04
0.02
0.00
Chile
Egypt
India
Japan
Mexico
Mongolia
Pakist an
Viet nam
Average
Conclusion part I: gender & crises
• Widening gap for women’s health indicator (maternal
mortality rate) for crisis countries
• Widening gap for girls’ relative school enrolment and
completion rate for crisis countries
=> financial crises can have disproportionate negative effects on
several gender indicators: widening gaps
II. The Lehman Sisters Hypothesis
“If women had run the financial
sector, we would not have found
ourselves in this crisis”
Survey among Dutch
financial professionals
•
•
•
•
N = 111
67% women, 33% men
December 2010-January 2011
LinkedIn snowball method through a group of
women financial professionals
• Not representative but exploratory
Age differences between men and women (%)
21-30
31-40
41-50
51-60
61-+
years
years
years
years
years
Total
Female
6.8
47.3
37.8
8.1
0
100
Male
2.7
43.2
27.0
24.3
2.7
100
Total
5.4
45.9
34.2
13.5
0.9
100
Pearson Chi Square test is statistically significant at the 10% level.
Educational differences between men and women (%)
Highschool Specialised BA
MA
PhD
Total
training
Female
2.7
9.5
13.5
63.5
10.8
100
Male
5.4
13.5
16.2
48.6
16.2
100
Total
3.6
10.8
14.4
58.6
12.6
100
Pearson Chi Square test is not statistically significant
Income differences between men and women in euro
per month (%)
< 5,000 5,000 –
10,000
10,000 – 15,000 –
15,000
20,000 >
Total
20,000
Female
24.3
59.5
12.2
0.0
4.1
100
Male
21.6
37.8
21.6
5.4
13.5
100
Total
23.4
52.3
15.3
1.8
7.2
100
Pearson Chi Square test is statistically significant at the 5% level
Differences in bonus between men and women in
euro in 2007 (%)
< 10,000 10,000 –
No
bonus
100,000
100,000 –
Total
500,000
Female
32.4
36.5
29.7
1.4
100
Male
27.0
29.7
37.8
5.4
100
Total
30.6
34.2
32.4
2.7
100
Pearson Chi Square test is not statistically significant
Differences in bonus between men and women in
euro in 2009 (%)
No
< 10,000
bonus
10,000 –
100,000 –
100,000
500,000
Total
Female
48.6
31.1
18.9
1.4
100
Male
35.1
21.6
40.5
2.7
100
Total
44.1
27.9
26.1
1.8
100
Pearson Chi Square test is statistically significant at the 10% level
Self-perceived risk adjustment in volatile markets (%)
Yes
No
Total
Female
62.2
37.8
100
Male
70.3
29.7
100
Total
64.9
35.1
100
Pearson Chi Square test is not statistically significant.
Risk taking before and after the crisis (%)
80
70
60
Female 2007
50
Male 2007
40
Female 2009
30
Male 2009
20
10
0
Very low
Low
Neutral
High
Very high
Pearson Chi Square test is not statistically significant for 2007 but is statistically significant at the
10% level for 2009.
female
male
female
male
Should more women be hired at the financial top when they
have the same level of education and experience as men? (%)
Yes
No
Total
Female
97.3
2.7
100
Male
81.1
18.9
100
Total
91.9
8.1
100
Pearson Chi Square test is statistically significant at the 1% level
Would more female leadership prevent a next crisis? (%)
Yes
No
Total
Female
86.5
13.5
100
Male
51.4
48.6
100
Total
74.8
25.2
100
Pearson Chi Square test is statistically significant at the 1% level
Conclusion part II: a gender paradox
Even though women’s financial attitudes seem more
effective to prevent, or reduce the extent of a crisis, men do
not as strongly as women support a higher share of equally
qualified women at the top of the financial sector
• Why?
 Protection of male power? (status quo of gender disbalance)
 Strong male believe in a linear positive relationship between risk and
ROI? (rational economic man)
 Strong male and female belief that women are less good at calculus
and that men are better leaders? (gender stereotyping skills)
III. Caring Finance:
ethics for financial reform
“thick concepts” on the crisis:
• “hiding risky situations”
• “excessive liberalization”
• “extremely high bonuses”
• “irresponsible loans”
• “failing control”, “regulatory capture”
• “perverse incentives”, “moral hazard”
• “too rosy assessments”
• “excessive liquidity related to consumerism”
Conventional ethics & finance:
• Utilitarianism: concerned with autonomy and
maximizing self-interest
 contributed to causing the crisis
 undermined the rules that were put in pace after
the previous crisis
• Deontology: concerned with the right cause of
action for everyone
 was inadequate to prevent the crisis
 is insufficient to deal with the crisis and reform
Ethics of care
• Concerned with maintaining relationships and
caring for each other’s needs
• Based on women’s moral experiences as care
givers, but recognized as a wider human
experience => theorized in feminist ethics
• The central value of care is responsibility:
 contextual (unlike a rule or right)
 relational (unlike autonomy or personal freedom to
pursue one’s self-interest)
Ethics of care & the crisis
• Responsibility in financial relationships:
 long-term perspective for sustaining these
relationships
 recognition of the importance of context rather
than universal rules
• Reducing risk from the recognition that:
 finance is vulnerable to a high degree of
uncertainty
 people may be affected by risk in many ways
Keynes (formulated by Skidelsky,
2009) on a crisis:
“The cures are not meant to be definitive; they
are subject to all sorts of special assumptions
and are necessarily related to the particular
conditions of the time.”
=> not deontology but ethics of care …
Two case studies of caring
finance in the Netherlands
• Open interview with two bankers at a treasury
and documentary research
• Participant observation, interview on a farm,
and price data collection & basic calculation
Contingent, cooperative capital
• Rabobank: large cooperative bank, AAA
• Senior Contingent Note (SCN) issued in 2010:
 value of the bond does not appear on the balance
sheet unless the bank’s equity capital ratio falls
below 7%
 in that case the bank’s core capital will be
strengthened because the bank receives 75% of the
value of the outstanding SCNs (“bail-in”)
High demand
•
•
•
•
10 year fixed rate Senior Contingent Note
annual coupon of 6.875%
twice oversubscribed (London, NY, Frankfurt)
generated 1.25 billion euro
Caring dimensions:
• Responsibility towards tax payers: no need for
bail-out
• Responsibility towards financial sector
stability: incentive to keep risk levels low and
capital-equity ratio high
• Less risk for moral hazard because there are no
shareholders demanding high quarterly profits
• BUT: not demanded by members but
developed by financial whizz-kids
Crowd funding for a green
future
• Organic milk farm (diary, meat, cheese)
• ‘Boer-zoekt-buur’ crowdfunding by 30
consumers, 250 euro each, in exchange for 6
vouchers of 50 euro to be spent annually
• Products: meat, diary, nuts, ice cream, night in
the haystack with farmers breakfast
• 50% financed through crowdfunding
• => ROI = 3% annually
Additional benefits for farmers:
• No pay back in money: saves money for other
expenditures
• Pay back in products ensures the farmers
 fixed minimum demand
 Increased volume sold
=> helping to attain economies of scale.
• Personal relationships -> ambassadors
• Personal commitment -> pool of voluntary
labour & management advise
Additional benefits for
‘neighbours’
• Known origin of organic food
• Opportunities to get involved (adoption iof a
cow, voluntary farm labour’ dancing cow
event)
• Price advantage of products: 30%
Product
Shop
prices
Meat loaf
Entrecote
Rib-eye
Steak
Tournedos
Sausage
Apple juice
Walnuts
Cheese
Av. weighted
price difference
11,00
21,90
23,50
28,50
53,50
25,20
1,45
9,98
11,30
Prices at
Price
‘Beekhoeve’ difference
per kg(%)
9,50
- 14%
23,00
+ 5%
19,00
- 19%
23,00
- 19%
35,00
- 35%
13,50
- 46%
2,00
+ 38%
6,00
- 35%
13,00
+ 12%
- 30%
Social returns
• Green energy production
• Network supporting transition to a green
economy
• Low risk due to
 Transparency
 Relationship building
 Reduced volatility in ROI and farm sales
Weaknesses
• Administrative burden for farmers: transaction
costs (but cheaper than bank fees …)
• Low transactability of debt & returns:
localness
Conclusion part III: caring
finance
• Caring finance helps to reduce financial risk
• Caring finance is complementary to regular
finance and can reap “normal” ROI
• Caring finance has already started ….
Sources:
• ‘Caring Finance Practices’, Journal of Economic Issues 47 (2), 2013, pp. 419425.
• with Ricardo Crespo, ‘Would We have had this Crisis if Women had been
Running the Financial Sector ?’, Journal of Sustainable Finance and Investment
1 (3-4), 2012, pp. 241-250.
• ‘The Lehman Sisters Hypothesis: an Exploration of Literature and Bankers’,
ISS Working Paper no. 545, June 2012. The Hague: Institute of Social Studies.
• ‘Gender Trends in Developing Countries During Financial Crises’, ISS
Working Paper no. 511, The Hague: Institute of Social Studies of Erasmus
University Rotterdam, 2010, 20 pp.
• ‘Post-Keynesianism meets Feminist Economics’, Cambridge Journal of
Economics 34 (6), 2010, pp. 1123-1144.
• ‘Caring for Economics’ in Ananta Giri (ed.), Creative Social Research:
Rethinking Theories and Methods. Lanham: Lexington (imprint of Rowman and
Littlefield), 2004, pp. 83-111.