Go for it! Chief Economist Carmen Reinhart reflects on Women in Finance

Janet Yellen made headlines recently when she became the first female U.S. treasury secretary, but women are still few and far between in the world of finance. For International Women’s Day, World Bank Group Chief Economist Carmen Reinhart, who was just named among Barron’s 100 Most Influential Women in U.S. Finance, reflects on her career as a pioneer in this field.  

We see more and more women in leading roles, now with Ngozi Okonjo-Iweala at the World Trade Organization among many others. Will this make a difference?

Women are 50% of the population, so a greater balance in representation will hopefully lead to a more inclusive response, especially as we work to address the many, many legacies of COVID-19. This is a very unequal crisis, and women and girls have been hit hardest especially in the developing world. It will be a big challenge to get girls back in school. It’s good to have leaders that are more attuned to their needs.

You started your career on Wall Street 30 years ago. Tell us about that experience.

I started at my first job as a professional economist in March 1982 in the now-defunct Wall Street firm Bear Stearns. By August, Mexico defaulted on its sovereign debt, followed by country after country. The financial crisis, contagion and all the other issues that I worked on were fascinating. As a ‘puppy’ on Wall Street, my learning curve was steep.

There weren’t many women around you, were there?

No, for sure, and although there has been some rebalancing, it remains true to this day. There is a path for optimism, but the movement in the economics profession has been at snail's pace.  If you look at finance in particular women are still relatively scarce. Studies show that the natural sciences have done better than economics. In this day and age, it’s not unusual to attend a conference, or visit a hedge fund, to find you’re the only woman.

Were you always interested in working in finance?

No, when I was in high school in Florida, I thought I wanted to study fashion. In college, I happened to take a course in economics and was enamored. I realized I had to go to grad school. My parents were very protective like many Cuban families, but I had relatives in New York who could keep an eye on me. And so, when I received a fellowship, I went to study at Columbia University.  Ever since I was a child, I was captivated by Sherlock Holmes and admired how he connected the dots to figure out a puzzle. Empirical economics, for me, is importantly about figuring out puzzles.

You share the American immigrant experience, coming to the U.S. at the age of ten from Cuba. Has that experience influenced your work?

I remember it like it was yesterday. We left everything. We were allowed three sets of clothing, and we each had a suitcase. Back then in Cuba, my parents, like so many others, were circumspect in speaking for fear of being heard and reported. I am American, but this experience has shaped my perspective. A recurring source of my frustration is when people view the world entirely through the prism of their own country. It may also have led me to believe that education, or human capital in general, is one of the few things you can really call your own and take with you.

After a brief stint on Wall Street, you went back to school.

My first years in the financial industry were fascinating. But later I became frustrated that you could never go into depth and focus on a specific analytical issue or problem. That’s not the nature of the business. I decided to go back to Columbia University and finish my dissertation. The real-time work experience from this period provides fuel for my research to this day. What left a lasting impression on me was this whole idea of what the global community could do. After I received my PhD, I joined the research department at the IMF. As I became increasingly engaged in academic and policy research, I transitioned to academia, and now I am back in policy.

Being a woman, you were not on a level playing field. What helped you along the way?

I wrote my first major paper on financial vulnerabilities after I joined the IMF, which marked the beginning of years of collaboration with Guillermo Calvo, then Senior Advisor at the Fund. He was my professor at Columbia and I see him as my mentor. In our early work, we argued that external factors, such as a benign global environment and low U.S. interest rates, sent capital in search of a higher return. A prevailing view at the time was that financial flows are a reward for “good behavior”. He encouraged me to go out and present at conferences, to talk to policy makers and academics. I have a big connection with him to this day.  I have also focused on topics that are important, and that has helped.  

Any advice for women who are considering a career in the field of economics/finance?

Go for it!