Gender diversity on bank director board : an international study

Abstract

The under-representation of women directors in corporate boardrooms has been attracting great attention from researchers worldwide; however, their influences on corporate decisions and outcomes are still unclear. In order to fill the gap in the literature, this thesis investigates the roles of women directors in bank boardrooms by examining their impacts on three different aspects: bank risk-taking, bank performance and bank efficiency. Particularly, this thesis aims to provide answers to three main research questions: (1) What are the impacts of board gender diversity on bank risk-taking, bank performance and bank efficiency? (2) How does culture affect the impacts of board gender diversity? (3) Is critical mass theory valid in explaining the impacts of board gender diversity on bank risk-taking and bank performance? This thesis starts with an analysis of the impacts of women directors on bank risk-taking by using a hand-collected sample of 480 listed commercial banks across 18 developed and 21 developing countries over the period 2007-2016 and running panel regressions with bank fixed-effects and year fixed-effects. This study also addresses endogeneity issues by using the dynamic panel system generalised method of moments (GMM) estimators as a robustness check. The findings indicate that lower bank risk-taking is associated with greater board gender diversity, supporting the Lehman Sisters hypothesis in the international context; however, this effect is significantly weakened in countries with more hostile perceptions towards working women. This study also confirms the critical threshold of three female directors to play a significant role in reducing bank risk-taking, providing novel international evidence in support of critical mass theory from the banking sector. This thesis also examines the effect of board gender diversity on bank performance using the same dataset and methodology. The results provide empirical evidence on the positive impact of board gender diversity on bank accounting performance and confirm the validity of critical mass theory by showing that bank boards need at least two women to improve financial performance and the impact becomes significantly stronger when there are at least three women in the boardroom. Another aspect that has been uncovered is the relationship between board gender diversity and bank efficiency. The results suggest that banks with greater female board representation are more profit and cost efficient.

Date of Award	2022
Original language	English