Accounting, finance & control

The Big Short film and the "Lehman Sisters" discussion

By Mijntje Lückerath | March 3, 2016 | 3 min read

The film The Big Short (5 Oscar nominations) about the run-up to the financial crisis again raises one of the most intriguing questions about the crisis: "Would the world have been in such a financial mess if it had been Lehman Sisters?"

To my knowledge, this question was first posed in February 2009 during one of the panel discussions at the World Economic Forum (WEF) in Davos. Katrin Bennhold, a journalist, described this incident in the article "Where would we be if women ran Wall Street?" in The New York Times (2009) and added that it "certainly hit a nerve with some of the more defensive male participants at the WEF".

Just one of the answers was: "Probably not, women would never have come up with all those sophisticated tools." And yet this answer sounds like a form of criticism, and not like a compliment.


I had to think of this again after I had been to The Big Short this week. This is a shocking film about the run-up to the financial crisis. This film explains in detail that, among other things, the crisis was a consequence of investments in synthetic products. Not real existing products, but gambling on gambling with no real product being involved any more. Possible losses were not limited to the depreciation of the underlying real product, but a multitude thereof.

Due to a poorly functioning market system, these risks were not properly noticed: everyone (banks, rating agencies, analysts, the SEC), was protecting their own trade and this became more important than a fair price for the risks taken. When the values of the underlying product, the mortgages on houses, really did fall in value, the entire house of cards collapsed. It is now general knowledge that this led to a large number of bankruptcies, including Lehman Brothers.


So in Davos, micro-financing pioneer Muhammad Yunus responded that "the current crisis would almost certainly not have happened if women had shaped financial practices, women wouldn't have taken the enormous types of risks that brought the system down". Neelie Kroes[H1]  was "absolutely convinced that testosterone was one of the reasons the financial system had been brought to its knees" and that "in general terms, females are a bit less ego-driven and a bit more responsible than men".

Christine Lagarde, the current director of the International Monetary Fund, but at that time minister of Finance with the French government, commented on the extremely small number of women who were present at the WEF and said that this "illustrated two shortcomings of the past years, one, this is a world where there is too little diversity, and two, there is too much herding behavior".

Are there any examples then with which we could substantiate the claim that the financial crisis would have gone differently with more women in charge? In 2007, Halla Tomasdottir and Kristin Petursdottir set up Audur Capital in Iceland and survived the financial crisis without government assistance. Their story and vision were described for instance in the articles "After the crash, Iceland's women lead the rescue" in The Guardian (2009) and in "The women who want to save banking" by the BBC (2009). The analyses argue that "the spectacular meltdown of the financial markets in Iceland was caused by a banking and business culture that was buccaneering, reckless and overwhelmingly male".

Female values

Tomasdottir and Petursdottir argued for a balance in male and female characteristics. As far as they are concerned, women alone would be just as unbalanced as only men. In the interview, Tomasdottir provides an example of questions which should have been posed in the film The Big Short: "Women are willing to ask stupid questions. We won't take risks we don't understand, so we ask: what is sub-prime?"

The two women shared their "five most important female values".

  1. Risk awareness: They don't want to invest in things that they don't understand.
  2. Profit with principles: It is not just about economic profit, but it is also about a positive social and environmental impact.
  3. Emotional capital: If they invest, they do that with emotional due diligence, they look at the people and consider whether the business culture forms an important asset or simply a liability.
  4. Unambiguous language: The financial world's language needs to be accessible, and not strengthen the estranging characteristics of the banking culture.
  5. Independence: They would like to see women become financially more independent, because only then will they get the freedom to be who they want to be without bias.

Intellectual short sightedness

In conclusion: In 2011, the IMF also concluded that the financial crisis was partly caused by a high degree of collective thinking, intellectual short sightedness and a culture in which voicing a different opinion appeared undesirable. The great question that lingers after seeing the film The Big Short is: has this situation substantially altered, or are we well on the way to the next financial crisis?

Women Corporate Directors Program

Mijntje Lückerath - full professorProf. Dr. Mijntje Lückerath is professor of Corporate Governance at TIAS School for Business and Society. She acts as teacher in various courses and is academic director of the Women Corporate Directors Program. This program offers ambitious women inspiration and insights and helps them to develop towards a top managerial position.

Read more about this program

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