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.

KEYWORDS:

• Women leaders
• Central banks
• glass cliff effect
• sovereign debt crises
• monetary policy

Introduction

Women remain at a disadvantage across all walks of life. This holds particularly true for leadership positions in central banks. Although the number of women in central bank leadership positions has recently increased,¹ research analyzing the promotion of women in central banks’ top positions remains scant. Expanding recent research on women’s representation on central bank boards and leadership positions (Bodea & Kerner, 2022a; Comunale et al., 2023; Masciandaro et al., 2023; Vallet, 2022), we hypothesise that women are more likely to be appointed to central bank leadership positions during times of sovereign financial distress.

Sovereign debt crises result from unsustainable fiscal deficits and represent an extreme macrofinancial bureaucratic failure, frequently backfiring on a central bank’s credibility (Ballard-Rosa et al., 2024; Roubini & Setser, 2004; Setser, 2023).² Besides rendering traditional monetary policy tools, such as interest rate hikes or domestic credit limits, ineffective, sovereign financial distress corroding the credibility of a central bank requires substantial management reform to restore investors’ trust (Blinder, 2000; Blyth & Matthijs, 2017; Fernández-Albertos, 2015; Roubini & Setser, 2004). To signal its commitment to policy reform, governments frequently decide on personnel changes in central bank leadership (Blejer et al., 2002; Masciandaro & Romelli, 2015; Reinsberg et al., 2021). Because forcing a central bank governor’s early departure frequently can appear as a government’s attempt to undermine central bank independence, personnel rotations on a central bank’s board can be an equally powerful signal to financial investors about a government’s commitment to reform (Adolph, 2013; Bodea, 2014; Dreher et al., 2010; Johnson, 2016; Masciandaro et al., 2023).

Within this context, promoting women to central bank leadership positions has several distinct advantages. First, abundant evidence supports the intimate connections between financial players, the government, and central bank officials (Braun, 2016; Braun & Gabor, 2020; Martin, 2022; Moschella, 2024). Given the ‘male-dominated’ nature of these professional and policy domains (Ainsley, 2017; Bisbee et al., 2023; Bodea & Kerner, 2022b; Vallet, 2024), women can be considered outsiders to established ‘old-boys’ clubs. Therefore, appointing women to leadership positions weakens the influence of established bureaucratic networks, injects diverse expertise into monetary policy decision-making, and enhances overall performance while blame for potential failure and political backlash against policy decisions falls onto the shoulders of the outsider (Adolph, 2013; Ainsley, 2017; Bernhard et al., 2002; Heinzel et al., 2024).³ Second, coupled with women’s greater degree of integrity in leadership positions alongside women’s transformational leadership approach, central banks can be expected to become more insulated from vested interests (Armstrong et al., 2023; Pereira & Fernandez-Vazquez, 2022; Vallet, 2024; Waylen, 2021). Third, sovereign debt crises create a much more demanding policy environment. During these times, women’s transformational and empathetic leadership style, in combination with a greater degree of resilience (Armstrong et al., 2023; Heinzel et al., 2024; Prügl, 2012), positions them well for navigating challenging situations, despite facing a higher risk of premature failure. In many instances, women appointed to these positions face substantially greater personal challenges, having to endure greater scrutiny of their professional conduct and facing substantial political backlash (Armstrong et al., 2023; Heinzel et al., 2024; Hozic & True, 2016; Prügl, 2012; Smith, 2022). To illustrate this point, consider the recent case of Turkey. Shortly after being re-elected, President Erdogan appointed Hafize Gaye Erkan to lead the Central Bank of Turkey ‘to gain credibility and anchor market expectations’.⁴ Hiking interest rates and putting a stop-gap to monetary financing, Governor Erkan was lauded in international financial circles for turning the tides for an ailing central bank while facing constant public harassment by entrenched elites, forcing her resignation after only eight months into her position, ‘to protect her family amid a “reputation assassination”’.⁵

Using cross-country time series data covering all sovereign debt crises from 2000 to 2017, we show that women are more likely to be appointed to central bank leadership positions during these crisis episodes. Substantively, everything else equal, a sovereign debt crisis is related to a subsequent increase in the likelihood of women’s appointments to a central bank board by 21.1 per cent. Through several robustness tests, we also mitigate concerns that competing mechanisms drive our results. We conduct a series of robustness checks to ensure our findings are not spurious. Notably, we confirm that increased descriptive representation of women in central bank leadership does not drive sovereign debt crises, addressing concerns about reverse causality.

To further strengthen our findings, we also consider scenarios where credibility concerns are heightened, making the appointment of women to leadership positions more likely. First, appointing women to central bank leadership is more critical in weak institutional frameworks in which central banks are not institutionally safeguarded from direct monetary financing of governments. In these instances, appointing outsiders to the central bank’s leadership is paramount, as it disrupts bureaucratic networks and enhances oversight. Our empirical findings confirm this notion. Second, we expect our postulated relationship to be more pronounced in central banks without direct financial supervision mandates, as these central banks have no legal authority to reign in excessive risk-taking in the financial sector (Aklin & Kern, 2021; Copelovitch & Singer, 2020; Masciandaro & Romelli, 2018). During sovereign debt crises that involve or emerge from the domestic financial system, central banks are frequently forced to bankroll a government’s bailout attempts without having oversight over the financial system (Copelovitch & Singer, 2020). To signal a change to the existing macro-financial bureaucratic status quo at the heart of the crises and its commitment to deep-seated macro-financial reform, a government can appoint women to the central bank’s leadership. Finally, we believe women are more likely to be appointed to handle sovereign debt crises that require external assistance from the IMF. In these situations, requesting support from the IMF is frequently a pre-requisite for orderly debt restructuring and represents a building block for escaping the doom-loop dynamics of imploding fiscal balances (Ferry & Zeitz, 2024; Kern et al., 2019; McDowell, 2016; Nooruddin & Simmons, 2006; Roubini & Setser, 2004). In line with our prior line of argumentation, signalling policy changes and a willingness to ‘make tough calls’, women are more likely to be promoted to the leadership of a central bank (for a related argument, see Armstrong et al., 2023; Heinzel et al., 2024; Hozic & True, 2016). Our empirical findings support this notion. In line with these findings, we verify that appointing women to central bank boards during financial turmoil leads to a significant contraction in broad money supply and contraction in credit extended to a government, indicating a shift towards less government budget financing. Put in a nutshell, our findings confirm Christine Lagarde’s notion that ‘in times of crisis, women eventually are called upon to sort out the mess’.⁶

Our findings contribute to several strands of the existing literature. First, we contribute to a rapidly expanding research agenda analyzing women in political economy (Betz et al., 2023; Dengler & Völkle, 2022; Guisinger & Kleinberg, 2023; Heinzel et al., 2024; Hozic & True, 2016; Krook & O’Brien, 2012). Our work is closely related to those analyzing women’s leadership during economic turmoil (Armstrong et al., 2023; Detraz & Peksen, 2016; Heinzel et al., 2024; Hozic & True, 2016; Reinsberg et al., 2024).⁷ Whereas Hozic and True (2016) – building on several country cases – provide an extensive account of women’s leadership during times of economic turmoil, Armstrong et al. (2023) concentrate on women’s appointment to finance ministries during banking crises and Heinzel et al. (2024) on women’s cabinet appointments during IMF programs, we focus on women in leadership positions in central banks. Despite focusing on vastly different policy domains, a unifying finding across all these contributions is that women are appointed to these leadership positions during times of turmoil. Here, a key innovation of our work is that we concentrate on the descriptive representation of women in central bank leadership positions during sovereign debt crises.⁸

Second, our work complements a vast literature on the political economy of central banking (Bodea et al., 2019; Dietsch, 2020; Garriga, 2016; Johnson, 2016; Massoc, 2024; Romelli, 2022; Romelli, 2024; Vallet, 2024). Here, our contribution lies at the heart of the debates analyzing women in central banks. Our findings closely map onto existing research on women’s career advancement within central banks (Carney, 2019; Comunale et al., 2023; Hospido et al., 2019; Vallet, 2024), women board representation (Bodea & Kerner, 2021; Charléty et al., 2017; Diouf & Pépin, 2017; Passos & Marins, 2024), and its effect on monetary policy decision-making (Bodea & Kerner, 2022b; Diouf & Pépin, 2017; Masciandaro et al., 2023; Vallet, 2020). A key innovation of our approach is to show that the timing of selecting women for central bank leadership positions is driven by opportunistic political behavior. Incumbent governments strategically appoint women to signal their commitment to policy reform. Our insights are also tangentially related to recent debates on monetary and fiscal policy interactions (Bodea & Hicks, 2016; Dietsch, 2020; Goutsmedt & Fontan, 2024; Maxfield, 1994; Moschella, 2024; Polillo & Guillén, 2005). Indeed, we can verify that women are more likely to be appointed to the central bank board during a sovereign debt crisis, underscoring the importance of central bank management reform to restore the viability of sovereign lending relationships.

From a policy perspective, our findings support the notion that by appointing women to leadership positions during a sovereign debt crisis, a government can signal commitment to policy reform and central bank independence. Across our selected case studies, we find compelling evidence for women’s ability to ‘walk the talk’, even against significant political and personal backlash, underscoring the salience of women’s leadership during economic crises. Thus, our findings challenge the narrative that portrays women as ‘dovish’ in monetary policymaking (Bodea & Kerner, 2022b; Passos & Marins, 2024; Vallet, 2020), suggesting that this narrative derives from deeply rooted societal gender bias rather than reflecting women’s capability and readiness to make unpopular decisions.

Argument

Central banks have not been immune to gender bias and discrimination. As of January 2022, only 16 central banks were headed by a woman. Qualifying these results, Diouf and Pépin (2017), Masciandaro et al. (2023), Bodea and Kerner (2022a), and Vallet (2024) document that these dynamics also manifest in the lower descriptive representation of women on central bank governing boards. Analyzing G-7 central banks alongside the ECB, Comunale et al. (2023, 3) conclude that central banks still have ‘a long way to go’ to increasing women’s ‘representation in managerial positions’. While several studies suggest that societal advancements toward gender equality are key to enhancing women’s descriptive representation (Bodea & Kerner, 2022a; Comunale et al., 2023; Dengler & Völkle, 2022; Hospido et al., 2019; Krook & O’Brien, 2012), recent evidence suggests that to shatter the so-called ‘glass ceiling’, women are frequently accepting leadership positions during times of organisational and economic turmoil (Armstrong et al., 2023; Heinzel et al., 2024; Hozic & True, 2016; Ryan & Haslam, 2005).

To illustrate this point, consider the case of Ukraine in 2014. At the outset of a macro-financial meltdown in 2013, the Ukrainian government appointed Valeria Gontareva to spearhead the National Bank of Ukraine. Being handed the Herculean task of restoring macro-financial stability amid internal political unrest, Gontereva plowed through substantial domestic political resistance to implementing an entire battery of institutional and policy reforms while having to endure constant harassment and death threats (Gontareva & Stepaniuk, 2020). Turkey is another case in point. Teetering on the brink of a severe balance of payments crisis due to decades of macroeconomic mismanagement, the recently re-elected President Erdogan appointed Dr. Hafize Gaye Erkan as the first female governor of the Central Bank of Turkey in June 2023. Celebrated as a progressive move towards gender empowerment and a return to reason in Turkish economic policymaking, Governor Erkan was handed the extremely challenging task to ‘rebuild the [central bank] after years of mismanagement, purges, and demotions’.⁹

We argue these cases follow a common thread described in feminist literature as the so-called ‘glass cliff’ onto which women are lifted during crises (Bruckmüller et al., 2014; Bruckmüller & Branscombe, 2010; Klugman et al., 2014; Ryan et al., 2010; Ryan et al., 2016; Ryan & Haslam, 2005).¹⁰ Building on this literature, we hypothesise that women are more likely to be appointed to central bank leadership positions during sovereign financial distress. Sovereign debt crises are the result of unsustainable fiscal deficits. Historically, central banks have played an important role in the build-up of these unsustainable fiscal positions. In many instances, central banks have provided cheap credit to state-owned enterprises, absorbed excess supply of government bonds, or printed money to fund ballooning budget deficits (Aklin & Kern, 2021; Brooks et al., 2015; Bodea & Kerner, 2021; Makoff, 2024; Martin, 2022; Steinberg et al., 2013). Despite sharing a commonality to bankroll government’s deficits, monetary interventions to support government budgets can take vastly different forms. For instance, in the recent case of Argentina, the central bank issued buying options to investors ahead of treasury auctions, implicitly committing to buy these ailing assets and cross-financing the government (Makoff, 2024). Furthermore, during the recent COVID-19 pandemic, many central banks have resorted to absorbing government bond issuance to bail out governments in fiscal duress, leading to a resurgence of calls for central bank independence in the international policy community.¹¹ The viability of these legal provisions critically depends on a central bank leadership’s ability to fend off political pressures and withstand the influence of vested interests (Bauer & Faseruk, 2020; Binder, 2018; Binder & Spindel, 2019; Braun, 2016; Gavin & Manger, 2023; Martin, 2022).¹²

Times of sovereign distress are frequently seen as public management failures resulting from inappropriate central bank meddling, adversely impacting a central bank’s credibility in maintaining macroeconomic stability (Best, 2019; Bodea & Hicks, 2015; Copelovitch & Singer, 2020; Hansen, 2022; Reinsberg et al., 2021). In these situations, the undermined credibility of the central bank renders traditional monetary policy tools,¹³ such as interest rate hikes or domestic credit limits, ineffective in controlling speculative pressures (Blinder, 2000; Blyth & Matthijs, 2017; Fernández-Albertos, 2015; de Haan & Eijffinger, 2019). Seeking to restore investor trust and a central bank’s credibility, governments frequently turn to institutional reforms involving restructuring central bank leadership to signal their steadfast commitment to policy reform (Blejer et al., 2002; Masciandaro & Romelli, 2015; Reinsberg et al., 2021). While removing a central bank’s governor frequently appears as a government’s attempt to further undermine central bank independence (Dreher et al., 2010), personnel rotations on a central bank’s board can be a powerful signal to financial investors about a government’s commitment to reform. Promoting women to central bank leadership positions has several distinct advantages.

Abundant evidence suggests that finance and central banking are men-dominated professions and policy domains (Bodea & Kerner, 2022a; Carney, 2019; Masciandaro et al., 2023; Vallet, 2024). Indeed, among central bankers, women can be considered outsiders to established ‘old-boys’ clubs that thrive on informal internal networks (Ainsley, 2017; Baerg et al., 2021; Bodea & Kerner, 2021; Comunale et al., 2023; Vallet, 2022). For instance, the former Governor of the Bank of England, Mark Carney (2019, p. 5), praising the increase of women in leadership positions during his tenure at the Bank of England (BoE), pointed out that, despite advances in diversifying its staff, ‘opportunities to broaden skills and experience were granted on an informal basis to those who either knew about the opportunity or were recommended by a colleague’, underscoring the importance of these networks promoting the interests of men and preventing women from ascending into leadership positions. Women are often disconnected from established bureaucratic networks, which were the architects of an unsustainable macro-financial landscape. Thus, appointing women to leadership positions weakens the influence of these established bureaucratic networks and signals a shift in internal power structures (Adolph, 2013; Ainsley, 2017; Bisbee et al., 2023; Carney, 2019). Given women’s different leadership styles that have been characterised as transformational, more inclusive and empathetic, less corruptible, and more resilient,¹⁴ women are more likely to implement significant organisational changes and take far-reaching reform measures (Pereira & Fernandez-Vazquez, 2022; Smith, 2022; Waylen, 2021). Still today, Governor Zeti Akhtar Aziz, who became Asia’s first woman central bank governor in 2000, is lauded in the international central banking community for her key role in lifting the Malaysian economy from the brink of financial abyss during the Asian financial crisis and upgrading the inner workings of the Bank Negara in subsequent years.¹⁵ In a macro-financial bureaucratic crisis, these leadership attributes, alongside women’s outsider status, make women more likely to follow through with politically challenging tasks (Armstrong et al., 2023; Bruckmüller et al., 2014; Heinzel et al., 2024; Ryan & Haslam, 2005). In central banking, the ability to not give in to political pressures and bend to vested interests will form the foundation for restoring investor confidence and central bank credibility (Bauer & Faseruk, 2020; Binder, 2018; Martin, 2022; Reinsberg et al., 2021). For instance, in the case of Ukraine, Governor Gontereva did not shy away from foreclosing some 87 banks that were mere ‘money laundering machines’ to restore confidence in the Ukrainian financial system while restructuring the operational inner workings of the central bank, weeding out corrupt networks (Gontareva & Stepaniuk, 2020). International press commentators and the leadership of multilateral organisations still laud Governor Gontereva for her courage to implement, as she describes in her own words, ‘absolutely incredible, draconian, administrative measures’,¹⁶ that were instrumental in rebuilding the central bank’s credibility and bolstering macroeconomic stability.

Beyond this, increasing the descriptive representation of women has additional tangible benefits. First, ample evidence supports the notion that women in leadership positions are important role models, incentivising women to pursue similar paths and pushing for organisational reforms reducing gender inequities (Alexander, 2012; Carney, 2019; Comunale et al., 2023; Vallet, 2024). Alongside evidence supporting the notion that diverse teams perform better on many tasks,¹⁷ increasing the descriptive representation can impact organisational effectiveness positively. This becomes particularly important during crises when circumstances are more challenging than during tranquil times. Second, increasing the number of women in leadership positions can imply greater democratic legitimacy (Carney, 2019; Clarke & Roberts, 2016; Vallet, 2022). As Mark Carney (2019, p. 3), commenting on the importance of increasing diversity among central banking staff, pointed out, ‘diversity can build the trust required to deliver our remits, as people are more likely to trust people they recognise, reducing misperceptions that we are experts making esoteric decisions in ivory towers for the benefit of others’. Thus, greater women’s leadership, coupled with women’s integrity in these positions, fuels the drive to implement essential monetary reforms, inject diverse expertise into monetary policy decision-making, and enhance overall performance (Betz et al., 2023; Bue et al., 2022). Therefore, appointing women to leadership positions in central banks is a viable way to bolster the credibility of monetary policy authorities.

Appointing women to leadership positions also has distinct political advantages. First, besides signaling its will to invest in significant organisational changes to restore a central bank’s credibility, a government might also try to signal to international investors and donors its willingness to adhere to international best practices by following progressive societal gender norms. Although evidence on the viability of such a mechanism is scant, recent gender mainstreaming efforts within the universe of UN organisations (and at the IMF) alongside investors paying closer attention to gender empowerment in policy-making (IMF, 2022), governments might try to curry favour with these stakeholders by appointing women during times of financial distress (for a review of this aspect, see, for instance Heinzel et al., 2024). Second, being outsiders to established bureaucratic networks puts women in an extremely challenging situation, carrying substantial professional and reputational risks. Without access to established bureaucratic networks, women are at risk of being easy prey for vested interests trying to derail unpopular policy measures without fearing significant retaliation or negative repercussions, inadvertently protecting political insiders from public backlash for unpopular policy measures. Indeed, in many instances, women represent the lender of last resort solution for leadership positions because no one else is left willing to take these positions. To protect their future career prospects in light of the substantial risk of failure, members of established networks, traditionally men, will shy away from accepting these positions. Frequently, incumbents will also ‘bench’ promising male candidates for these leadership positions to shield their personal and professional reputations, making women viable candidates for these risky leadership positions (Armstrong et al., 2023; Baerg et al., 2021; Heinzel et al., 2024; Ryan & Haslam, 2005). For instance, in the case of Ukraine, powerful oligarchs focused their efforts on Governor Gontereva and started multiple smear campaigns, culminating in massive protests and personal death threats while the President’s inner circle remained shielded (for a detailed description, see Reinsberg et al., 2021). Similarly, finding herself under permanent attack from powerful interest groups for hiking interest rates, Governor Erkan announced her resignation only eight months after being appointed.¹⁸

Synthesising these insights, we hypothesise that the descriptive representation of women in central bank leadership positions increases around sovereign debt crises.

There are several threats to our narrative. Indeed, we implicitly assume that women readily accept positions with substantial personal and professional risks. There are several reasons to believe that this is the case. First, as in the case of Governor Gontereva, being outsiders to established networks, women are often unaware of the significant risks associated with assuming leadership positions. Asked why she took the position, in an interview with the Washington Post in 2017, she responded ‘of course, I knew there were problems, but I could not imagine what problems I would face’.¹⁹ Second, in male-dominated professions, opportunities for women to be appointed to senior management positions are scarce (Bordo & Istrefi, 2023; Carney, 2019; Comunale et al., 2023; Goulard, 2021; Hospido et al., 2019), making them harder to turn down. Third, anecdotal evidence indicates that marginalised groups, such as women and people of colour, actively seek out leadership roles that involve risk. This strategic choice is driven by the need to navigate their unique challenges, including being overlooked and facing excessive scrutiny as outsiders (Glass & Cook, 2016; Hozic & True, 2016; Smith, 2022).

A second concern is that women might be perceived as more ‘dovish’ and lack organisational authority,²⁰ rendering women’s ability to restore the corroded credibility of a central bank during a crisis situation implausible (Ainsley, 2017; Bodea & Kerner, 2022b; Diouf & Pépin, 2017; Vallet, 2024). Despite the widespread popularity of this view on women in central banking, scant systemic evidence supporting this ‘biased’ view of women exists (for a recent survey, see Passos & Marins, 2024).^21,22 For instance, Masciandaro et al. (2023) analyzing the composition of 86 central banks between 2001 and 2017 find that greater descriptive representation of women is associated with a more hawkish monetary policy. Relying on a different data sample, Bodea and Kerner (2021) establish the opposite result, leaving the debate unresolved. Concerning single-country case studies, research on the Federal Reserve appears to be the most advanced, indicating that women members of the FOMC are perceived to be more ‘dovish’ (Bodea & Kerner, 2022b; Bordo & Istrefi, 2023; Goulard, 2021). Nevertheless, Bordo and Istrefi (2023) find that women are not intrinsically more ‘dovish’ and argue that FOMC members’ voting record rather reflects personal belief systems formed through lived experiences, the economic ideology of their Alma Mater (e.g., Chicago vs. Harvard), and the political affiliation of the U.S. president who appointed them (Republican vs. Democratic). Vallet (2024), analyzing a wider sample of countries, arrives at a similar conclusion. Furthermore, Goulard (2021), a deputy governor of the Banque de France, argues that contextual variables are frequently ignored when analyzing women in monetary policy debates. Thus, not all too surprisingly, analysts observing the appointment of Dr. Adriana Kugler to the FOMC ‘were keen to learn if she’ll come out more strongly as the dove many initially pegged her as’,²² underscoring the uncertainty about women’s ‘dovishness’ in office. In sharp contrast to these perceptions, the actions of Governors Geronteva, Zeti Akhtar Aziz, and Dr. Erkan (who have all been appointed during economic crises) indicate that women ‘walk the talk’ of tough policy measures, which is at odds with a ‘dovish’ narrative concerning women in central bank leadership positions.

Our theory has several observable implications. First, as signalling policy changes constitutes an important rationale for appointing women, this effect is more pronounced when central bank legal provisions are weak in preventing monetary financing. Built around personal relationships and political connections among men in the leadership of a government’s bureaucracy (Braun, 2016; Kalaitzake, 2019; Vallet, 2022), a government invested in policy change needs to cut these intimate personal ties linking a nation’s government finances to a central bank’s printing press. In these situations, appointing women not part of the ‘Old Boys Club’ into leadership positions is likely a powerful signal about the government’s commitment to policy reform (Armstrong et al., 2023; Heinzel et al., 2024; Kalaitzake, 2019).²³ Importantly, we believe that greater women’s representation will also lead to a quantifiable shift towards more prudent monetary policymaking, reflected in a contraction in monetary growth rates and lower credit to the government.

Second, we expect that our postulated relationship is stronger for central banks without a direct financial supervision or regulation mandate. The intuition for this result is that central banks tied to a narrow mandate frequently cannot intervene to prevent excessive risk-taking or malpractices in the financial sector (Copelovitch & Singer, 2020; Masciandaro & Romelli, 2015; Reinsberg et al., 2021). At the same time, during sovereign debt crises that involve or emerge from the domestic financial system, central banks are frequently forced to bankroll a government’s bailout attempts (Copelovitch & Singer, 2020). To signal a change to the existing macro-financial bureaucratic status quo, governments can appoint women to weed out corrupt practices and signal their commitment to deep-seated macro-financial reform. For instance, in the case of Ukraine, Governor Gorenteva was a leading voice in public finance reform, cutting the intimate ties between corrupt elites’ financial vehicles (or money laundering schemes hidden behind corporate bank shells) and the country’s treasury (Reinsberg et al., 2021). In these situations, appointing women as outsiders to the status quo to the leadership of a central bank represents a powerful instrument to interrupt existing networks and signal commitment to policy reform.

Finally, in line with our proposed argument, we believe women are more likely to be appointed around sovereign debt crises that require external assistance from the IMF. In these situations, government finances have deteriorated to the extent that investors stop bankrolling a government’s deficits (McDowell, 2016; Nooruddin & Simmons, 2006; Reinsberg et al., 2019; Roubini & Setser, 2004). Requesting support from the IMF is frequently the only option to escape the doom-loop dynamics of faltering fiscal balances and a pre-requisite for orderly debt restructuring (Ballard-Rosa et al., 2024; Gelpern, 2011; Roubini & Setser, 2004). In line with our prior line of argumentation, signalling policy changes and a willingness to ‘make tough calls’, women are more likely to be promoted to the leadership of a central bank (for a related argument, see Armstrong et al., 2023; Heinzel et al., 2024).

A key concern remains: why does this logic not necessarily apply in the context of currency or systemic banking crises? There are several reasons why women’s appointments become more likely during sovereign debt crises.²⁴ In systemic banking crises, central banks are often not directly involved in financial crisis resolution; instead, finance ministries play a more critical role in rescuing ailing banking sectors (Armstrong et al., 2023; Hozic & True, 2016; Reinhart & Rogoff, 2009). Therefore, women are more likely to be appointed to leadership positions in finance ministries than central banks, as confirmed by Armstrong et al. (2023). Additionally, central banks do not always supervise and oversee the financial sector (Copelovitch & Singer, 2008; Copelovitch & Singer, 2020; Masciandaro & Romelli, 2018). Being deprived of supervisory and regulatory authority over the financial sector, central banks have little impact on the build-up of financial risks in the banking systems and thus cannot necessarily be held accountable for the onset of these crises (e.g., Copelovitch & Singer, 2020). Concerning currency crises, large swings in exchange rates can result from sudden shifts in global financial markets (e.g., contagion effects) or be triggered by severe terms of trade shocks (e.g., commodity price shocks) (Aklin et al., 2022; Brooks et al., 2015; Goutsmedt & Fontan, 2024; Jones et al., 2021; Moschella, 2024) without any active government or central bank interference and thus cannot necessarily be blamed on macroeconomic management failures. As such, currency crises are hard to predict. Importantly, these types of financial crises frequently require swift monetary policy action and exchange rate stabilisation, leaving little time and scope for personnel rotations (Sufi & Taylor, 2022). Next to implementing significant improvements in exchange rate management and upgrades of institutional safeguards, governments increasingly rely on swap agreements to counter short-term speculative forces, reducing the risk of sharp currency depreciation and subsequent crises (McDowell, 2019; Moschella, 2024; Sahasrabuddhe, 2024).²⁵ In sharp contrast to these latter crises forms, sovereign debt crises, however, involve more complex, multi-faceted, and longer-term challenges (Ballard-Rosa et al., 2024; Gelpern, 2011; Reinhart & Rogoff, 2009; Roubini & Setser, 2004). They often require long-winded negotiations with international investors, financial institutions, and domestic stakeholders and imply the need for deep reforms to restore investor confidence. Rebuilding a nation’s creditworthiness and investor confidence often hinges on signaling a commitment to sound macroeconomic policymaking, where strengthening the central bank’s political independence is paramount. Women’s transformative and empathetic leadership styles and perceived integrity can signal to the international community and domestic audiences a serious commitment to substantial changes (Armstrong et al., 2023; Heinzel et al., 2024; Hozic, 2021).²⁶ Overall, women’s ability to ‘practice the art of engaging with people who think differently’ (Rivlin, 2017), alongside their transformational and empathetic leadership style in combination with a greater degree of resilience and willingness to accept these appointments (Armstrong et al., 2023; Heinzel et al., 2024; Prügl, 2012), positions them well for navigating these policy changes and leading complex negotiations while effectively managing public expectations.

Data and methods

Data

To test our hypotheses, we construct a panel dataset of up to 90 countries from 2000-2017. The number of countries is restricted due to the availability of data on central banks’ board members.

Our outcome of interest is a binary indicator for whether at least one woman was appointed to the central bank governing board in a given year (Masciandaro et al., 2023). We use the date of the announcement rather than the date when a central banker takes office, which reflects our theoretical argument about signalling effects. Given the low prevalence of women central bank governors, we also choose to consider all cases in which women are appointed to the central bank board.²⁷

Our main predictor captures the incidence of a sovereign debt crisis, which involves a sovereign default to any of its creditors or the restructuring of its debt (Laeven & Valencia, 2013). The Laeven-Valencia data includes 20 episodes of sovereign debt crisis during 2000–2017. From the same database, we also draw indicators of currency crises – a sharp nominal depreciation of the currency vis-à-vis the U.S. Dollar – and systemic banking crises – involving ‘significant bank runs, losses in the banking system, or bank liquidations’ and ‘significant banking policy intervention measures in response to significant losses in the banking system’ (Laeven & Valencia, 2013, p. 4). We also create a binary indicator for any type of financial crisis, which includes sovereign debt crises, currency crises, or banking crises. Following our theoretical argument, we expect only sovereign debt crises to affect the likelihood of women’s central bank appointments. We introduce additional independent variables, for example, to test scope conditions in the empirical section.

The set of control variables draws from the respective literature on gendered cabinet appointments and the political economy of sovereign debt crises (Armstrong et al., 2023; Heinzel et al., 2024; Krook & O’Brien, 2012). We control for the percentage of women in parliament (Teorell et al., 2021) and whether the country has a female leader (Nyrup & Bramwell, 2020). These variables capture the degree of political empowerment of women in general (Armstrong et al., 2023; Krook & O’Brien, 2012). To account for societal progress in terms of gender empowerment, we include V-Dem’s Women’s Political Empowerment index (Sundström et al., 2017). We expect that women central bankers are more likely appointed when political institutions are more favourable to women’s empowerment (Bodea & Kerner, 2022a). We also control the political ideology of the government, expecting that left-wing governments are more likely to put women forward for political leadership positions while facing a greater penalty from financial markets (Ballard-Rosa et al., 2021; Krook & O’Brien, 2012; Sattler, 2013).

In line with existing literature, we include an additional set of control variables for macroeconomic circumstances and political institutions, such as the (log of) GDP per capita and an index of democracy (Teorell et al., 2021). Higher per-capita income may advance post-material values, while more civil liberties and political rights may be conducive to appointing women in politics (Betz et al., 2021; Krook & O’Brien, 2012). To capture the pressures of various financial interests, we also control for FDI inflows, credit to the government, and private credit drawn from the World Bank Global Financial Development Database (Pepinsky, 2007; Reinsberg et al., 2021). Variable definitions and descriptive statistics for all the variables are shown in Appendix Table I.

Methods

We estimate linear probability models with two-way fixed effects. Country-fixed effects control for unobserved time-invariant confounders and imply that our estimates identify within-country relationships. Year-fixed effects can account for general trends, such as the general empowerment of women in politics. Given the need for fixed effects, we opt for a linear model, even in the presence of a limited dependent variable. We cluster standard errors at the country level. To mitigate concerns about potential biases arising from our model specification, we perform a logit transformed analysis of the dependent variable, using λ(p): = log(p/(1 − p)), which extends over the entire real numbers and thus avoids out-of-bounds predictions. We find qualitatively similar results (Appendix Table IV). To verify that our results do not depend on the number of women represented on a central bank’s board,²⁸ we estimate pseudo-Poisson maximum-likelihood regressions with fixed effects on countries and years.²⁹ We obtain similar results with this alternative outcome variable and estimation approach (Appendix Table V).

Results

Our empirical tests unfold in three steps. First, we show a positive relationship between sovereign debt crises and the subsequent appointment of women central bankers. Second, we run multiple additional tests that help us interpret these relationships as evidence for our theoretical arguments. Specifically, we demonstrate that the relationship is stronger where central banks have a particular need for credibility. We also show that women’s appointments happen in the worst crises, triggering subsequent IMF bailouts. Furthermore, we address threats to inference, notably that women central bankers do not trigger sovereign debt crises. Third, we perform analysis to suggest that women central bank leaders are linked to reductions in money supply and lower inflation, suggesting that these gendered appointments serve the goal of fostering a credible transition toward more prudent macroeconomic policies.

Sovereign debt crises and the appointment of women central bankers

We begin by examining the relationship between different types of financial crises and the likelihood of women’s appointments to the central bank (Table 1). In model 1, we do not find any relationship between financial crises and women’s central bank appointment for a pooled indicator of financial crises. In subsequent models, we disaggregate different types of financial crises. In model 2, we find a significantly positive relationship between sovereign debt crises and women’s central bank appointments. We cannot detect such an effect in the occurrence of banking crises. In substantive terms, if a country suffers a sovereign debt crisis, the subsequent likelihood of a woman being appointed to the central bank increases from 14.9 per cent (95%-CI: 11.7–18.1 per cent) to 39.6 per cent (95%-CI: 15.6–63.7 per cent) – an economically significant effect given that women’s central bank appointments are rare (with a mean incidence of 15.0 per cent per country-year). In model 3, we further control for currency crises, confirming again that the result only holds for sovereign debt crises.

Table 1. Financial crises and women’s appointment to central bank boards.

	(1)		(2)		(3)
Financial crisis	−0.002	(0.058)
Sovereign debt crisis			0.248**	(0.114)	0.246**	(0.113)
Banking crisis			−0.133*	(0.069)	−0.134*	(0.072)
Currency crisis					0.006	(0.059)
Women’s share in board	−0.360***	(0.112)	−0.363***	(0.112)	−0.363***	(0.112)
Women’s dismissal from board	−0.023	(0.035)	−0.027	(0.036)	−0.027	(0.036)
Observations	1185		1185		1185
Countries	81		81		81
Adjusted-R2	0.133		0.136		0.135

Note: The dependent variable is a dummy that takes value 1 if at least one woman is appointed to the central bank governing board. Estimates are obtained using linear probability models with year- and country-fixed effects included and all predictors (except dismissal) once-lagged. Robust standard errors clustered on countries in parentheses. ***, **, and * denote statistical significance at the 1%, 5% and 10% levels, respectively.

We probe the robustness of our result to three sets of substantive confounders (Table 2). In model 1, we include covariates capturing the political empowerment of women as well as government ideology. In model 2, we add covariates capturing economic fundamentals like GDP per capita, foreign direct investment, and credit flows, as well as political institutions, specifically the level of democracy. In model 3, to ensure that we untangle sovereign debt crises from adverse macroeconomic shocks in general, we further include economic growth and the inflation rate. While none of the control variables is statistically significant at conventional levels, we continue to find a significantly positive relationship between sovereign debt crises and women’s appointment to the central bank.

Table 2. Sovereign debt crises and women’s appointment to central bank boards.

	(1)		(2)		(3)
Sovereign debt crisis	0.386**	(0.148)	0.317*	(0.160)	0.398**	(0.175)
Government led by a woman	0.057	(0.063)	0.078	(0.061)	0.086	(0.063)
Finance minister is a woman	0.063	(0.070)	0.088	(0.074)	0.089	(0.078)
Gender Equality Index	0.097	(0.374)	0.125	(0.341)	0.285	(0.446)
Left-wing government	−0.030	(0.041)	−0.022	(0.040)	−0.022	(0.040)
Women’s share in board	−0.383***	(0.117)	−0.342***	(0.111)	−0.341***	(0.111)
Women’s dismissal from board	−0.029	(0.036)	−0.048	(0.037)	−0.050	(0.038)
GDP per capita			0.109	(0.140)	0.135	(0.141)
Political rights and civil liberties			0.031	(0.024)	0.039	(0.027)
Foreign direct investment			−0.016	(0.011)	−0.013	(0.013)
Credit to government			0.004	(0.003)	0.005	(0.003)
Credit to private sector			−0.000	(0.001)	0.000	(0.000)
Economic growth					0.004	(0.005)
Inflation					−0.031	(0.021)
Observations	1148		1044		1011
Countries	78		77		77
Adjusted-R2	0.139		0.105		0.118

Note: The dependent variable is a dummy that takes value 1 if at least one woman is appointed to the central bank governing board. Estimates are obtained using linear probability models with year- and country-fixed effects included and all key predictors and controls twice-lagged. Robust standard errors clustered on countries in parentheses. ***, **, and * denote statistical significance at the 1%, 5% and 10% levels, respectively.

Before conducting further analysis, we assess the robustness of our main results. We present full tables in the Appendix and briefly report the results here. First, we control for central bank independence (CBI) – an institutional mechanism that may substitute for women’s appointments with respect to credibly signalling policy change (Bodea & Hicks, 2015; Garriga & Rodriguez, 2019; Kern et al., 2019). Including a contemporaneous quasi-continuous CBI index in our model does not change our findings (see Appendix Table VI) (Masciandaro et al., 2023).³⁰ Second, we follow the empirical setup as proposed in Armstrong et al. (2023) and re-estimate models with different control variables. We find qualitatively similar results for our main coefficient of interest (Appendix Table VII). Third, we conduct placebo tests over the timing of women’s central bank appointments using an extended lag-lead structure of the main predictors. If some underlying confounder(s) were to drive our results, we would find significant effects of our core predictors outside theoretically plausible timings. However, this is not the case. We indeed confirm that sovereign debt crises affect women’s appointments contemporaneously and with a one-year lag but not at other time points (Appendix Table VIII).³¹ Finally, we use a different dependent variable – the dismissal of women from the central bank board – to run a placebo check. We confirm that the statistically significant relationship disappears (Appendix Table IX).

To mitigate concerns about potential alternative explanations, we conduct several auxiliary analyses. In particular, we verify that greater descriptive representation of women in central bank leadership positions does not drive sovereign debt crises. The likelihood of a sovereign debt crisis is unaffected following women’s appointment to the central bank board (Appendix Table X). We also find no significant relationship between women’s appointment to the central bank board and subsequent IMF programs, which are often a precondition for official debt restructuring (Appendix Table XI). Another possibility is that sovereign debt crises might trigger reform to increase the political independence of central banks, which might increase the likelihood of women’s appointments (Bodea & Kerner, 2022b; Masciandaro et al., 2023). We do not find support for this alternative explanation (Appendix Table XII). Finally, to test if women leaders, who often take office in politically turbulent times (Hozic & True, 2016), appoint other women in key agencies like central banks, we explicitly measure transitions from men executives to women executives in politics. We indeed find that appointing a woman leader as the head of government tends to increase the likelihood of a woman appointee to the central bank board in the subsequent year (Appendix Table XIII). As the finance ministry often proposes candidates for the central bank board, which are then nominated by the head of government (Johnson, 2016; Moschella, 2024), we test for the possibility that gendered transitions in finance ministry drive our results. The estimated coefficient is positive for leadership transitions in finance ministries but does not reach statistical significance. These results suggest that, at least in some instances, women’s appointments in central banks are driven by women leaders at the top of government, which is in line with findings in the existing literature on women’s leadership and its impact on the descriptive representation in public institutions (see, for instance, Krook & O’Brien, 2012).

Women appointments and central bank credibility

In the remainder, we begin to unpack the mechanisms underpinning the significant relationship between sovereign debt crises and the subsequent appointment of women to the central bank board.

A key motivation for appointing women to the central bank is to quickly restore confidence in a central bank whose credibility may have suffered from imprudent policy choices. We suspect that a central bank needs to bolster its credibility, especially when its institutional framework aimed at putting a stop-gap on government debt financing is weak. We test this possibility by adding an interaction term between sovereign debt crises and an indicator for whether the central bank scored high on regulatory provisions that limit its engagement in government debt financing (Romelli, 2024). We find a statistically significant conditional relationship between sovereign debt crises and the appointment of women to the central bank precisely when central banks have limited possibilities to prevent their misuse of government budget financing through the money press (Appendix Table XIV). Our reading of this finding is that appointing women to leadership positions signals international investors a government’s commitment to cutting existing bureaucratic network ties.

In further analysis, we show that a similar conditional relationship exists for central banks that lack regulatory competence over the banking sector (Appendix Table XV). The intuition for this result is that some sovereign debt crises are due to governments bailing out an ailing financial sector. If central banks cannot intervene to prevent excessive risk-taking in the financial sector, they require alternative sources of credibility for prudent economic policy (Copelovitch & Singer, 2020; Masciandaro & Romelli, 2015; Reinsberg et al., 2021). Therefore, the appointment of women to the central bank represents a powerful instrument in such cases as well.

Finally, we consider cases of particularly severe sovereign debt crises (requiring some form of debt restructuring), in which the need to restore central bank credibility is paramount (Reinsberg et al., 2019). Indeed, international creditors frequently demand that an IMF program be put in place before agreeing to any type of debt restructuring (Ballard-Rosa et al., 2024; Ferry & Zeitz, 2024; Setser, 2023). For this reason, we believe that an impending IMF program is a useful proxy for such a severe sovereign debt crisis. When asking for an IMF bailout, governments incur a sovereignty cost due to stringent IMF conditionalities (Kentikelenis et al., 2016; Nooruddin & Simmons, 2006; Vreeland, 2006), which is why they seek to avoid IMF bailouts as long as possible. Given these dynamics and women’s exceptional abilities to navigate complex negotiations with multiple stakeholders (Armstrong et al., 2023; Hozic & True, 2016), we would expect to find a significantly positive relationship between an impending IMF program and the probability of women being appointed to the central bank. This is what we find indeed (Appendix Table XVI). To illustrate this point, consider the case of Ecuador, where a newly appointed Central Bank Governor, Veronica Artola, played an instrumental role in negotiating a deal with the IMF to address the mounting fiscal pressures (Vallet, 2020). Taken together, our results so far support the notion that governments appoint women to the national central bank to strengthen its credibility during financially turbulent times.

Women leadership in central banks and macroeconomic outcomes

If women are appointed to restore a central bank’s credibility amidst sovereign debt crises, we would expect that such appointments should ensure a transition toward more prudent monetary policies. Policy changes might indeed be faster than alternative credibility-boosting mechanisms, such as enhancing central bank independence, which might take time to take effect and thus might be less preferable for ailing debtors. In fact, Masciandaro et al. (2023) demonstrate that leadership by women in central banks makes central banks shift toward anti-inflationary policies relative to tackling unemployment.

To test this central assumption underlying our proposed signalling mechanism, we examine how key macroeconomic outcomes change after the appointment of women to the central bank board in times of financial turmoil. To that end, we construct an event-study design dataset with symmetric three-year windows around the onset of a financial crisis (Laeven & Valencia, 2013). We then examine how the appointment of a woman to the central bank affects four crisis-related macroeconomic outcomes in a barebones two-way fixed effects model with a lagged dependent variable.

We find that appointing women central bankers is associated with a statistically significant contraction of the broad money supply. Furthermore, we find a decrease in credit to the government, which suggests a tightening of central bank policy toward less government budget financing when women central bankers are involved. We do not find consistent effects on the remaining two outcomes (Table 3).

Table 3. Sovereign debt crises and women’s appointment to central bank boards.

	M2/GDP		Credit to government		Private credit		Inflation growth
	(1)		(2)		(3)		(4)
Women’s appointment	−1.761**	(0.775)	−0.749*	(0.388)	−1.586	(2.194)	0.295	(0.430)
Lagged outcome	0.735***	(0.103)	0.743***	(0.036)	0.674***	(0.032)	−0.107	(0.085)
Observations	208		211		213		192
Countries	26		28		28		27
Adjusted-R2	0.980		0.951		0.965		0.035

The dependent variables are M2/GDP, Government credit/GDP, Private-sector credit/GDP, and Logged inflation growth. These were obtained from the World Bank’s Development Indicator Database (WDI, 2021). Estimates are obtained using linear two-way fixed effects regression with a lagged dependent variable. The key predictor is women’s central bank appointment, which is once-lagged. Robust standard errors clustered on countries in parentheses. ***, **, and * denote statistical significance at the 1%, 5% and 10% levels, respectively.

In the Appendix, we probe whether the appointment of women to the top echelons of the central bank – as central bank governors or vice-governors – affects these macroeconomic outcomes. Mirroring our results, we find a weakly significant reduction in broad money supply and a significant reversal in inflation growth (Appendix Table XVII).

In sum, our findings support the notion that women’s appointment to the central bank’s leadership can help a government restore the credibility of its national central bank. Underpinning this mechanism is women’s track record of significantly more prudent macroeconomic policy outcomes as central bank leaders.

Conclusion

An increasing number of women has been reaching the highest echelons of central banking. However, research analyzing the promotion of women to central banks’ top positions remains scant. Analyzing this question, we find a significantly positive relationship between the incidence of a sovereign debt crisis and the subsequent appointment of women to central banks using data for 90 countries between 2000 and 2017. Importantly, the same patterns did not emerge for other types of financial crises and were stronger in cases where the credibility of central banks was likely compromised. We also found evidence that this mechanism occurs in the most severe sovereign debt crises, as proxied by IMF involvement.

Our study has important policy implications. While the recent trends towards gender mainstreaming in policy frameworks advocate for increased women leadership, existing evidence suggests that governments opt to appoint individuals from outside the political sphere to significant positions, signalling their willingness to challenge established power dynamics and diminish the influence of entrenched bureaucratic elites (Alexiadou et al., 2022; Heinzel et al., 2024; Pereira & Fernandez-Vazquez, 2022; Weeks et al., 2023). Importantly, demonstrating that women central bankers are linked to a significant contraction in the monetary base and credit creation, our findings underscore women’s willingness and ability to ‘walk the talk’ with respect to implementing ‘tough’ policy measures. These findings complement recent research that challenges the notion of women being more ‘dovish’, which frequently hinders their advancement in central banks (for a recent survey, see Comunale et al., 2023; Passos & Marins, 2024; Vallet, 2024). In our context, a government can signal a policy reform and strengthen central bank independence by appointing women to leadership positions during a sovereign debt crisis.

While we specifically examine this mechanism for women in leadership positions within central banks, the underlying logic should extend to other marginalised groups and other bureaucratic institutions (Armstrong et al., 2023; Dovi, 2002; Smith, 2022). Disentangling mechanisms in these specific policy domains is beyond the scope of our work but represents an important future research avenue. Besides being of the utmost importance for encouraging the next generation of women and marginalised groups to pursue a career in public leadership positions,³² we believe that women’s leadership in central banks will form a key institutional pillar in addressing the climate crisis and tackle the monetary dimensions of complex challenges concerning rising inequality and geopolitical fragmentation (Hozic, 2021; Smith, 2022; Vallet, 2024). For instance, the recent case of Ecuador, where former Governor Artola championed several initiatives to advance the central bank’s role in sustainable poverty alleviation, underscores women’s ability to critically shape policymaking to foster the greater public good, even under challenging macro-financial circumstances (Vallet, 2020, 2024). Similarly, it is well documented that Governor Lagarde’s leadership at the ECB has been instrumental in promoting the ‘greening’ of the European Central Bank and bolstering gender empowerment and the inclusion of underrepresented individuals within the organisation (Jabko & Kupzok, 2024; Massoc, 2024; Moschella, 2024). These achievements are even more remarkable, given that women, as we document, are frequently put onto a ‘glass cliff’ when assuming leadership positions, implying greater potential reputational risks and personal hardship. Analyzing these patterns in greater detail and across different public policy domains should remain a priority for future research.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Additional information

Funding

This work was supported by UK Research and Innovation [grant number: MR/V022148/1].

Notes on contributors

Andreas Kern

Andreas Kern is a Teaching Professor at the McCourt School of Public Policy at Georgetown University. His research focuses on the political economy of international monetary relations, financial market development, and credit market dynamics.

Bernhard Reinsberg

Bernhard Reinsberg is a Professor of International Political Economy and Develompent at the University of Glasgow. His research focuses on the policies and politics of international organisations, specifically international financial institutions.

Davide Romelli

Davide Romelli is an Associate Professor in the Department of Economics at Trinity College Dublin. His research focuses on international finance and macroeconomics, central banking and financial supervision.

Notes

1 As of January 2022, only 16 central banks were headed by a woman (Masciandaro et al., 2023).

2 There has been a substantial literature analyzing financial distress that confirm the notion of macro-financial bureaucratic failure in preventing the build-up of macro-financial vulnerabilities (Reinhart & Rogoff, 2009; Steinberg et al., 2013; Jones et al., 2021; Ballard-Rosa et al., 2021; Mitchener & Trebesch, 2023).

3 Recent evidence supports the notion that more diverse teams, particularly teams including more women, outperform traditional all-men teams (Dahl et al., 2021).

4 ‘Erdogan names Erkan to head Turkey central bank, policy pivot expected’ (Reuters, June 9th, 2023).

5 ‘Turkey central bank chief quits, citing need to protect her family’ (Reuters, February 2nd, 2024).

6 ‘Christine Lagarde: ‘Don’t let the bastards get you’ (The Washington Post, July 12, 2014).

7 Insofar, our contribution is also related to research analyzing the gendered consequences of economic crises, complementing a long list of contributions in the feminist political economy tradition (Davidson-Schmich et al., 2023; Detraz & Peksen, 2016; Elson, 2013; Elias & Rai, 2019; Hozic & True, 2016; Prügl, 2012).

8 In this respect, our work is also tangentially related to the increasing number of political economy contributions analyzing sovereign debt dynamics (Ballard-Rosa et al., 2024; Betz & Pond, 2023; Brooks et al., 2015; Ferry & Zeitz, 2024; Stasavage, 2011). Here, our work is most related to recent advances in understanding the political consequences of sovereign debt crisis on political outcomes and governance frameworks (DiGiuseppe & Shea, 2015; Hozic & True, 2016; Reinsberg & Abouharb, 2022; Stasavage, 2011).

9 ‘Hafize Gaye Erkan, a new central bank governor, takes on troubled Turkey’ (The Financial Times, June 10, 2023).

10 Research widely supports the concept of the ‘glass cliff’, showing a tendency to select women over men for risky leadership roles. Experimental studies, such as those by Ryan and Haslam (2005), indicate that women are often chosen as leaders when a company’s performance has sharply declined, while men are favored when performance has significantly improved (Ashby et al., 2006; Ryan and Haslam, 2007; Ryan et al., 2010). Observational studies across a wide array of disciplines also confirm this notion of women being handed far more challenging tasks when they are selected for leadership positions. Women tend to run for elections in constituencies historically favoring the opposition by larger margins (Kulich et al., 2014). Women are more frequently appointed to lead finance ministries during banking crises (Armstrong et al., 2023). Complementing this earlier research, Heinzel et al. (2024) find that women are more likely to be appointed to austerity-bearing ministries during IMF programs.

11 ‘Central Bank Independence: Why It’s Needed and How to Protect It’, Speech delivered by Tobias Adrian, IMF Financial Counsellor and Director of the Monetary and Capital Markets Department, Bank of Thailand Annual Retreat, June 14th, 2024. To cut the tight cord between fiscal and monetary authorities and contain these doom-loop dynamics, best-practice policy advice has been to increase the political independence of central banks. In particular, legal provisions preventing central banks from directly financing government outlays and state-owned enterprises have been implemented as standard measures to shield the political independence of central banks (Bodea & Hicks, 2016; Reinsberg et al., 2019; Romelli, 2024).

12 However, once monetary authorities cannot lean against increasing public deficits and public debt levels surpass sustainable levels, central bankers’ hands are forced to bankroll government outlays, i.e., fiscal dominance, (Bodea & Hicks, 2015; Copelovitch & Singer, 2020; Hansen, 2022; Martin, 2022).

13 The debate over monetary credibility arises from the inherent time inconsistency problem in monetary policymaking. This implies that policymakers may be tempted to manipulate monetary instruments to stimulate the economy or finance excessive public spending for short-term political gains, even at the cost of higher inflation rates (Kydland & Prescott, 1977; Barro & Gordon, 1983; Blinder, 2000). We have adopted the broad definition of monetary credibility proposed by Blinder (2000, p. 1422): ;A central bank is credible if people believe it will do what it says’. According to this definition, monetary credibility depends on a central banker’s ability to adhere to a preannounced monetary policy path and shape economic expectations regarding long-term interest rates and inflation. Regarding inflation, a loss of monetary credibility means that monetary authorities lose the ability to anchor inflation expectations, which limits their ability to control rampant inflation (for a survey of related literature, see de Haan & Eijffinger, 2019; Best, 2019).

14 Given that many women in leadership positions in central banks had to overcome significantly more burdens to break through the ‘glass ceiling’, these tend to be more resilient, better educated, and possess a more diverse set of professional experiences compared to their male peers upon their arrival in these leadership positions (Comunale et al., 2023; Vallet, 2020; Vallet, 2024).

15 ‘Lifetime achievement award: Zeti Akhtar Aziz’ (Central Banking, January 14, 2016).

16 ‘Valeria Gontareva: Ukraine’s central bank reformer’ (The Financial Times, March 26, 2017).

17 Recent evidence supports that more diverse teams, particularly teams including more women, outperform traditional all-men teams (Dahl et al., 2021). For a recent survey concerning the role of gender diversity on team performance, see, for instance, Beegle et al. (2024).

18 These findings are in line with existing literature emphasising the role of violence against women in political office (for a survey, see Håkansson, 2024).

19 ‘She fixed Ukraine’s economy – and was run out of her job by death threats’ (The Washington Post, May 6).

20 We would like to thank an anonymous reviewer for bringing this to our attention.

21 Indeed, studies in behavioural economics reveal that women are generally more risk-averse than men, particularly in male-dominated fields (Goldin & Rouse, 2000; Akerlof & Kranton, 2005; Hozic & True, 2016; Vallet, 2022, 2024). In central banking, this risk aversion may lead women to strictly adhere to conservative norms to counteract negative gender perceptions (for a review, see, for instance, Vallet, 2024). As a result, if male central bankers view female colleagues as less reliable due to perceived ‘dovishness’, women might over-conform to hawkish standards to gain acceptance.

22 ‘Fed Board gets last governor as it nears economic crossroads’ (Reuters, September 7, 2023).

23 Here, we would like to point out that women as outsiders can ‘pollute’ and interrupt existing network structures that built the backbone for a crisis in the first place, in particular when monetary financing lies at the core of the emergence of fiscal distress (Goldin, 2014; Vallet, 2020, 2024). This effect is amplified when women appointed to these positions transfer into these positions from academia or the private sector because of a limited network and interests to align with special interests responsible for macro-fiscal mismanagement. Another amplifying factor might be women’s career considerations after their tenure (Carré & Demange, 2017; Kalaitzake, 2019; Passos & Marins, 2024). For instance, Carré and Demange (2017) analyze revolving door dynamics in central banking and argue that monetary policymakers leaving for the private sector frequently display similar interests to those of the private sector to maintain their career prospects in the private sector. Female board members’ career trajectories appear similar to men’s. However, we anticipate a slight imbalance in women’s ability to leverage their talents in the private/financial sector because of reported prevailing gender discrimination in these sectors/professions (Carney, 2019). If this imbalance were to generalise, for which a large N setting alongside substantial data collection would be required, we can expect women to be more independent in their decision-making, strengthening their position as outsiders (Carré & Demange, 2017; Kalaitzake, 2019; Vallet, 2024). As collecting this type of data is beyond the scope of our analysis, we believe this remains an important issue for future research.

24 For instance, Hozic and True (2016) provides a panoramic analysis of women in politics during the Global Financial Crisis and documents increased women’s descriptive representation in policymaking and the financial industry. We do not doubt the viability of the proposed theoretical conjectures but believe that our mechanism particularly applies to sovereign defaults.

25 An indication concerning the effectiveness of these measures is that while all crises are rare events in our data sample, currency crises are even six times less frequent than sovereign debt crises.

26 Appointing women can also enhance a country’s image, demonstrating a progressive and inclusive approach to leadership, which can positively influence international perceptions and investor confidence (Heinzel et al., 2024).

27 A concern using this dataset is potential selection bias arising from the limited number of countries, which we list in Table II. As comparable datasets are not available, we conducted balance tests, which we report in the Appendix (Table III). We consider key characteristics such as income level, inequality, population size, trade openness, FDI inflows, gender equality, regime type, level of corruption, government quality, and central bank independence. We find that countries with available data are richer, more populous, more democratic, and less corrupt. This is not unusual for political-economic data like ours, given that it is difficult to measure these variables in politically closed systems. Our approach has been to control for the characteristics that may confound our relationship of interest through the sample selection effect. Importantly, there are no differences in the theoretically meaningful background characteristics, like central bank independence, gender equality, and government quality. This increases our confidence in the validity of our findings and their generalisability beyond the sample examined here.

28 We would like to thank the reviewers for bringing this point to our attention. This analysis might not be performed because threshold effects might drive our results. Indeed, it might be the case that governments appoint so-called ’token’ women, who have limited authority (Kanter, 1977; Vallet, 2022). Here, our findings align with recent research findings on the effectiveness of women’s leadership that report threshold levels as low as one Bauhr and Charron (2021); Funk and Philips (2019); Reinsberg et al. (2024). For instance, Bauhr and Charron (2021) analysis on mayors in France indicates that switching from a woman to a man in office significantly reduces corruption in municipalities. Similar patterns have been reported for the case of Brazil (Funk & Philips, 2019). In line with these findings, recent research on the impact of IMF programs on women’s labor market outcomes in the public sector confirms that a threshold as low as one woman in a cabinet leadership position is sufficient to explain the reduction of public sector layoffs during IMF programs (Reinsberg et al., 2024). In the context of central banks, anecdotal evidence from Janet Yellen’s career, detailed in recent literature, supports a similar notion for the case of the US Federal Reserve System (Hilsenrath, 2022). These observations align with recent studies suggesting women, arriving as outsiders at the top level of an organisation, can interrupt powerful leadership networks while being role models for other women (Armstrong et al., 2023).

29 Research has shown that these models outperform Poisson regression and negative-binominal models (Silva & Tenreyro, 2006; Winkelmann, 2013).

30 Here, we rely on a novel dataset provided by Romelli (2024) that provides a comprehensive account of central bank independence.

31 IMF programs – proxying for particularly dire debt crises – are a significant predictor of women’s central bank appointment only when the IMF program is impending but not in other years. These results make it unlikely that our results are due to confounding influences.

32 For instance, the appointment of Governor Adriana Kugler to the Board of Governors of the Federal Reserve has been hailed as a milestone of the Hispanic community in the United States and can be expected to work as a powerful catalyst for young women in economics to pursue a career in public service.