Daniel Ladley, senior lecturer in finance in the department of economics at the University of Leicester and Deputy Director of the Leicester Institute of Finance, said: “These findings have concerning implications for financial firms along with regulators and those wishing to change the gender balance in the financial markets. “Even though male traders may underperform compared to female traders, reward schemes in financial firms may still lead to large groups of male traders,” he said. “Financial bonus schemes typically reward the best performers and often lead to large numbers of other traders being let go, potentially even some of those making small profits. “It is important to note that the better performing male traders in these experiments were not more skilled, but made larger profits through riding their luck – decreasing their risk aversion, and so increasing their investment, in response to profits. The better performing female traders are less susceptible to these effects and so make extreme profits less frequently, but do lose less money. “As such, hormone effects may explain why financial markets are dominated by men. Trying to rebalance the population of traders to better match that of the population as a whole may require a complete change in how financial firms reward their staff – a movement from large bonuses for the best performers to a system that better rewards consistent profits.” Concerned with issues surrounding gender diversity in business? Don’t miss the Real Business First Women programme:Drawing on years of the First Women movement and the phenomenal network of pioneering women the Awards has created, this programme features The First Women Awards and The First Women Summit– designed to educate, mentor and inspire women in all levels of business.By Shané Schutte
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