The performance effects of gender diversity on bank boards

Abstract

Abstract:Previous literature has shown mixed results on the role of female participation on bank boards and bank performance: some find that more women on boards enhance financial performance, while others find negative or no effects. Applying Instrumental Variables methods to data on approximately 90 US bank holding companies over the 1999-2015 period, we argue that these inconclusive results are due to the fact that there is a non-linear, U-shaped relationship between gender diversity on boards and various measures of bank performance: female participation has a positive effect once a threshold level of gender diversity is achieved. Furthermore, this positive effect is only observed in better capitalized banks. Our results suggest that continuing the voluntary expansion of gender diversity on bank boards will be value-enhancing, provided that they are well capitalized.

The impact of women leaders on environmental performance: Evidence on gender diversity in banks

“…Recent studies have tested for the presence of a nonlinear relationship between board gender diversity and bank financial performance. Farag and Mallin () and Owen and Temesvary (), respectively, find that a threshold of women on bank boards increases profitability or reduces financial fragility. It is important to note that these results are based on a different bank sample but suggest that the nonlinear linkage persists regardless of the geographical context.…”

“…Apart from region and industry effects, a possible explanation for these varying results might be the presence of a nonlinear relationship between female participation on boards and environmental performance (Owen & Temesvary, ). A common feature to all the studies mentioned above is the inclusion of the percentage of female directors on the board as an explanatory variable without including the square of this variable to allow for a curvilinear link.…”

“…In the banking sector, to the best of our knowledge, the studies analysing the critical mass of female directors mainly focused on bank vulnerability to financial crisis (Farag & Mallin, ) or on financial performance (Owen & Temesvary, ) and not on the banks' environmental performance. Therefore, we move forward from this evidence, concentrating on the critical mass theory for the banking sector to advance the following hypothesis:H1 A critical mass of women on the board of directors has a positive impact on the environmental performance of banks.…”

Gender Composition of the Boards of Directors of the Regional Federal Reserve Banks

“…We check for this type of hiring dynamic in our data in Section 6 and …nd a similar pattern: the probability of hiring a new female director increases significantly when a current female director leaves and is negatively a¤ected by the number of women already on the board. There is some evidence within the banking sector that questions this hiring practice: using data on U.S. bank holding companies, Owen and Temesvary (2018) document a nonlinear relationship between gender diversity on boards and various measures of bank performance: adding more women to the board improves overall performance only if there is already at least one woman on the board. Adams and Ferreira (2009) …nd that female directors are better monitors: they have better attendance, participate in more committees, and the CEOs of their companies have more variable pay.…”

The Role of Regulatory Arbitrage in U.S. Banks' International Flows: Bank‐level Evidence

“…Host capital rules and bank traits: Scale and (risk) management quality mitigates arbitrage. Insofar as higher capitalization and asset size correspond to better (quality) management and risk-diversification expertise (for a review on the related literature, see Owen and Temesvary 2018), I expect to find that these characteristics mitigate the extent to which banks substitute from affiliate toward cross-border activities after a tightening in host country capital regulations. I find that better capitalization indeed mitigates capital rule arbitrage in all types of foreign activities, while asset size reduces arbitrage in affiliate activities.…”