An increase in female leaders within the finance sector can contribute to better and more ethical finance practices, according to finance expert Christine Lagarde.

International Monetary Fund managing director, Ms Lagarde has called on global financial institutions to appoint more women in leadership roles at the Finance and Society conference in Washington this week.

Currently 42 percent of women across the world lack access to basic financial services, compared with 35 percent of men. Only 20 percent of bank board positions are filled by women and only 3 percent of bank CEO roles are held by women. While in Australia alone, the boards of the country’s banks contain relatively few women. ANZ Banking group has 2 female board of directors of the total 8 directors, Nab had 2 female board of directors out of 11 and Westpac had 2 female board directors out of 8.

Ms Lagarde, a former French finance minister and the first woman to hold the post of finance and economy minister of a G-7 country emphasised the importance of bridging this gap. She argued encouraging greater financial inclusion will have the ability to empower women economically and allow them to invest in further education.

In addition, she claimed female leadership would benefit leading financial institutions. “ Several studies have shown that female leadership is more inclusive” Ms Lagarde argued.

“What would have happened if Lehman Brothers had been Lehman Sisters?” She asked referring to the failed Wall Street bank, Lehman Brothers.

The chair of the US Federal Reserve Janet Yellen, reinforced this statement arguing that inclusive leadership within the financial division has “disproportionately benefited the poor and served to alleviate economic inequality”.

Both women were speaking in response to the findings of the Commission on Banking Standards, which two years ago recommended that the banking industry address an “overwhelmingly male” culture on it’s trading floors.

In Australia, some banks have boosted their female quotas by selecting women in non-profit and loss lines such as human resources and marketing. But fewer women have succeeded in making it to the top roles within corporate banking and investment banking. None of our Australian banks have a female chairman or chief executive, after the recent retirement of Westpac chief Gail Kelly.

To encourage more women on boards, Ms Lagarde proposed that institutions need to better align the culture of the financial sector and match financial incentives with social objectives. She went on to say that recent studies have showed that gender balanced boards take less risk within financial trading.

She argued compensation should not be given for short term gains or ‘wins’. This only encourages further risk-taking  and short-termism. Rather, finance institutions should focus on compensation based on sustainable profits and long term performances, as this reduces the level of risk taking and creates a more productive working environment for both genders.

To read the full report, click here: http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/11586318/More-women-in-finance-could-make-banks-work-better-says-IMFs-Lagarde.html