Women on Boards and Financial Performance of Malaysian Banks

Abstract

Through the perspective of critical mass theory, this study provides empirical evidence on the effect of the existence of women on boards (WOB) on the financial performance of Malaysian banks. Our sample included 90 bank-year observations, which span the years 2013 through 2021. Using panel data regression analysis, this study documents the insignificant impact of the existence of WOB on bank financial performance, implying that the mere presence of WOB does not improve the financial performance of Malaysian banks. Nevertheless, the proportion of WOB and a threshold of 30% WOB have a favourable effect on financial performance as measured by ROE and ROIC. This study recommends that banks concentrate on recruiting the appropriate proportion of female directors and exploiting the possible advantages of a gender-balanced board, as greater diversity may help firms achieve excellent stability, which generally improves financial performance. This study has significant ramifications for regulators, policymakers, and practitioners.