How Global Gender Norms Affect Financial Markets in a Crisis

A woman leading a meeting
March 5 , 2024  |  By Alyssa Riley; Dobrina Jandik

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Although much has been and will continue to be done to combat gender inequality, it has unfortunately persisted across continents and cultures. Women have continuously faced disparities in human rights, voting, income, and education. While monumental progress has been made over time, with national milestones like the first woman earning a college diploma in 1840, the 19th Amendment in 1920, and the Equal Pay Act of 1963, gender inequality remains in the United States, as well as around the world.  

While the U.S. exhibits a more modernized attitude toward women than some countries do, the COVID-19 pandemic similarly inflicted a more negative impact on American women than on men. Women found themselves working in industries severely affected by lockdowns and restrictions, resulting in higher rates of job loss and income reduction. As schools closed and the demand for caregiving surged, many women assumed additional responsibilities at home, including homeschooling and childcare. Consequently, numerous American women had to leave the workforce entirely.  

Achieving complete gender equality, especially in terms of women’s participation in market development, remains a significant challenge everywhere, especially after COVID-19. 

Gender diversity, country norms and capital markets post-COVID-19” by Clinical Associate Professor Dobrina Jandik (University of Arkansas) quantifies the impact of country gender norms and attitudes on market development, specifically analyzing stock market reactions during and before the COVID-19 pandemic.  

Women in Finance 

In her earlier, currently unpublished research, “Gender Norms and Capital Markets Development Around the World,” Jandik demonstrates that a country’s attitudes and gender norms play a pivotal role in shaping the size of its capital markets and the extent of investor engagement. In fact, yet another study highlights that global GDP could increase by $28 trillion annually if women played an equal role to men in capital markets. For reference, $28 trillion is slightly more than the US GDP in 2023. 

Jandik’s research homes in on the impact of greater gender diversity and inclusion in society, the economy, and politics during the COVID-19 crisis. These factors influence the development of capital markets, investor returns, household financial gains, and the relationship between a country’s norms and the outcomes in capital market development.  

Jandik found that female-led countries, such as New Zealand (Jacinda Ahern) and Germany (Angela Merkel), responded more effectively to the COVID-19 crisis by implementing pandemic lockdowns earlier, resulting in significantly fewer cases and deaths – up to six times fewer — than countries led by men. 

Intersection of Inclusivity and Stock Markets 

Female involvement and leadership in every industry and community is of the utmost importance when understanding, representing, and providing societal and cultural needs to the populace. However, in many countries, barriers and discriminations restrict women’s ability to acquire leadership roles, which, in turn, harm capital markets and investment participation. As a means of exploring the roles of cross-border country norms on finances, Jandik’s study examines three strands of literature. 

First, a country that embraces inclusive norms for women in business, finance, and politics will see increased household investments in capital markets, which will lead to more significant market development. Second, reducing gender-exclusive education will grant women better access to social networks and connectedness, resulting in greater trust in the stock market and more participation by households. Lastly, promoting gender inclusion and educational opportunities for women will raise household and national investments, providing higher returns and participation in stock markets and financial activities.  

These three strands impact female willingness to invest in financial markets, leading to greater liquidity and returns. In fact, female-led firms show potential to outperform male-led firms, given that all variables are equal.

Jandik predicts that cultural norms and societal trust influence responses to crises. Additionally, countries with positive attitudes toward women’s rights may experience smaller financial losses during crises. Furthermore, countries with higher interpersonal trust are more likely to experience inclusive gender norms boosting investor participation in the stock market, making social networks involving women particularly valuable.  

Influence of Trust  

The impacts on women during the COVID-19 pandemic highlight pre-existing inequalities, not only in the U.S., but globally, emphasizing the imperative need to correct them. In addressing the repercussions in other nations, Jandik evaluates the positive influence of trust on investor participation and overall institutional quality and assesses countries’ attitudes toward women’s rights and their influence on market returns.  

When it comes to gender norms, some countries with negative attitudes toward women have controlling perspectives and regulations on what women should be able to do, say, and be.  

For example, in Malaysia and Nigeria, over 40% of the population believe that university education is more important for men than women, over 45% see women earning a higher income than men as problematic and 80% disagree with women being effective political leaders.  

“Naturally, agreement with any of the above statements is indicative of a society with negative attitudes toward the rights and abilities of women,” Jandik says about the surveys. “And thus likely describes countries where the female population is disadvantaged and/or marginalized.” 

Critical Societal Impacts 

The significant number of women who left the workforce during the pandemic negatively affected productivity and consumer spending in the U.S. Government policies and responses to the pandemic, however, such as paid family leave, stimulus packages, and reducing gender-based wage disparities, can have a significantly positive impact on both the economy and stock market. While many factors play significantly impactful roles, a strong culture of trust in a country’s financial system plays a pivotal role in restoring confidence and stability in these markets.  

Jandik’s findings support that living in a culture of trust enhances confidence in the markets, encouraging greater investment, liquidity, and substantial returns through mass participation. Moreover, countries with favorable views on women’s rights and capabilities experience reduced losses in index returns. The link between gender norms and investor involvement is more pronounced, whether positive or negative, in countries with stronger mutual trust.  

The COVID-19 pandemic accentuates the importance of addressing gender disparities and ensuring that women have equal opportunities in the workforce and society, regardless of their home country. This research, which delves into the cruciality of female education, participation, and leadership in finances during the pandemic, can guide to further advance gender equality in both the financial and academic realms.  

Low female participation in leadership roles harms countries, no matter which way you slice it. Having gender diversity is crucial to a successful workplace by allowing for differentiating opinions and ideas, as well as helping develop team processes and collaboration. 

Since the height of the pandemic, countries around the world have increased efforts to promote women in leadership roles. Many initiatives commenced, encouraging women to pursue careers in finance and technology, thus enhancing financial inclusion and witnessing a rising trend of female entrepreneurs. However, advancements in gender equality varies based on cultural, social, and economic factors, making it non-uniform across countries and industries. Additionally, progress still needs to be made as the gender pay gap persists, and gender biases continue to influence women’s experiences in the financial industry and leadership positions. 

Alyssa RileyAlyssa Riley is a first-year graduate student earning her master’s degree in News Narrative Journalism. Attending the University of Arkansas as an undergraduate student, she earned her bachelor’s degree in News Editorial Journalism while working in numerous writing, editing and social media roles. In addition to writing for Walton Insights, she has begun her fourth semester as a staff writer for the University’s Hill Magazine and freelances for Celebrate! Arkansas Magazine. After earning her master's, Alyssa hopes to work in the magazine industry, specifically covering arts and culture, entertainment and lifestyle genres.

Matt WallerDavid Dobrzykowski is an associate professor in the Department of Supply Chain Management at the Sam M. Walton College of Business at the University of Arkansas. He has published research on healthcare coordination in leading journals. Prior to earning his Ph..D, he served in vice president and chief executive officer roles on the provider and insurance verticals of the healthcare industry.