Empowering women in central banking

Abstract

When are women appointed to the board of central banks? While progressive societal gender norms may facilitate women’s ascension to leadership positions, recent research indicates that women are more likely to assume leadership positions during crisis periods. Because of the widely documented ‘male dominance’ in the policy domain of central banking, analyzing changes in women’s descriptive representation on central bank boards provides a unique laboratory to study the role of women in economic policymaking. Building on previous literature on women’s political leadership, we argue that sovereign debt crises are powerful catalysts for lifting women into leadership positions. We hypothesize that appointing women to central bank leadership positions during sovereign financial distress signals a policy change to bolster monetary policy credibility. Using data covering 90 countries from 2000 to 2017, we show that women are more likely to be appointed to central bank leadership positions during a sovereign debt crisis. A sovereign debt crisis increases the likelihood of women’s appointments to a central bank board by 21.1 percent. To mitigate concerns that our results are spurious, we implement a battery of robustness checks. Our study suggests that women’s empowerment can be beneficial in restoring monetary policy credibility during sovereign financial distress.