Lehman Sisters

Would the crisis have happened if Lehman Brothers had been Lehman Sisters? Evidence on population gender differences in risk-aversion suggest not. Consistent with the idea that female managers need not be more risk-averse than men, we find that listed banks with more female directors did not engage in fewer risk-taking activities around the crisis and did not have lower risk than other banks. However, banks with more diverse boards had better performances, even in instrumental variable regressions. Our results suggest that more gender diversity is not necessarily associated with less risk. However, diversity may be valuable in crisis situations.