1. Banks’ board and risk-taking: does gender diversity matter?
Giuliana Birindelli, University of Chieti-Pescara
Helen Chiappini, University of Chieti-Pescara
Marco Savioli, University of Salento, RCEA
60ª RSA - Università di Palermo ottobre

2. BACKGROUND AND RATIONALITY OF THE ANALYSIS
The global financial crisis has resulted in:
the strengthening of corporate governance mechanisms (De Laroisièr Committee 2009; Basel Committee on Banking Supervision 2010)
the implementation of diversified boards, at least in terms of age, professional experience and gender (European Directive 2013/36/EU).
Many governments have meanwhile established gender quotas by law over the last years (e.g. Norway, Spain, France, and Italy).
These events have been accompanied by a strong academic debate on the impact of gender diversity on firm risk.
Board diversity:
Pros: diversity brings a variety of backgrounds, skills and perspectives to the boardroom, therefore directors and companies may benefit from these diverse social and occupational experiences (Anderson, Reeb, Upadhyay, & Zhao 2011).
Cons: the cost of diversity – in terms of communication, coordination and conflict among directors with different backgrounds - exceeds its benefits (Putnam 2007).
Banks’ board and risk-taking: does gender diversity matter?

3. Muller-Kahle and Lewellyn (2011)
LITERATURE REVIEW (1/2)
Few studies on effects of diversity in the banking sector
Those studies (generally) focus on a specific country
Results are mixed
Non-linear relationship between gender and risk is underinvestigated like the impact of gender diversity on different levels of bank’s risk
Table 2: Gender and banks risk-taking
Authors
Findings
Grassa (2016)
IMF (2017)
Muller-Kahle and Lewellyn (2011)
Palvia et al (2015)
Skala and Weill
(2015)
Negative link
Berger et al (2013)
Positive link
Farag and Mallin
(2017)
Owen and Temesvary (2018)
U-shape
Table 1: Gender and corporates risk taking
Authors
Findings
Alves et al (2015);
Elsaid and Ursel (2011);
Faccio et al (2016);
Khan and Vieito (2013);
Wilson and Altaner (2011)
Negative link
Farag and Mellin (2016)
Positive link
Matsa and Miller (2013)
Sila et al (2016)
No link
Banks’ board and risk-taking: does gender diversity matter?

4. Table 3: Gender and banks risk-taking
LITERATURE REVIEW (2/2)
Table 3: Gender and banks risk-taking
Authors
Sample
Risk-Variables
Findings
Berger et al (2013)
German banks
RWA on Total Assets
Herfindhal- Hirchman Index
Positive link
Grassa (2016)
Islamic banks
Credit rating
Negative link
IMF (2017)
Banks of 72 countries
Z-score
NPLs ratio
Muller-Kahle and Lewellyn (2011)
U.S. banks
Subprime lending
Negative Link
Palvia et al (2015)
U.S. commercial banks
Tier 1 capital
Total equity capital to total assets
Bank Failure within 12 months
Skala and Weill
(2015)
Polish cooperative banks
Capital Adequacy
Equity to Assets
NPLs Ratio
Loan Loss Provision on Total Assets
Farag and Mallin
(2017)
European banks 2004–2012
Financial Fragility
% of Liquid Assets to Total Assets
U-shape
Owen and Temesvary (2018)
Sharpe ratio
Banks’ board and risk-taking: does gender diversity matter?

5. AIM AND HYPOTHESES DEVELOPMENT
The aim of this research is to investigate the relationship between gender diversity and banks’ risk taking.
Focus:
Riskless and risker banks
Non linear relationship between gender diversity and risk
Two hypotheses:
H01: The relationship between gender diversity and risk is affected by the level of risk
H02: There is a non linear relationship between gender diversity and risk
Banks’ board and risk-taking: does gender diversity matter?

6. Data on Gross domestic products per capita (GDP) are from World Bank.
DATA AND METHOD (1/2)
We collect data on listed banks from 40 countries over the years
Data on risk measures, boards and banks characteristics are from Thomson Reuters Datastream.
Data on Gross domestic products per capita (GDP) are from World Bank.
Four measures of risks:
Common equity ratio
Tier1 on total assets
NPLs ratio
Price volatility
Gender diversity variables:
Female directors
Massa women
Women sq
We use Panel Fixed Effect Estimation
Banks’ board and risk-taking: does gender diversity matter?

7. Table 4: Descriptive statistics
DATA AND METHOD (2/2)
Table 4: Descriptive statistics
Variables N
Mean SD
Min
Max
Risk measures
Common equity ratio
990
0,148
0,054
0,019
0,42
Tier1 on total assets
968
0,073
0,028
0,01
0,216
NPLs ratio
995
0,03
0,034
0,001
0,341
Price volatility
983
0,258
0,081
0,104
0,69
Female variables
l_Female directors
1015
0,155
0,114
0,6
l_Massa women board
0,314
0,464 1
Board characteristics
l_Independent
0,577
0,261
l_Board size
13,022
3,801 5 28
l_Board tenure
7,457
3,963
0,5
19,31
l_CEO duality
0,539
0,499
l_Board meetings
12,641
8,808 2 68
Bank characteristics
l_Total assets
4,16E+08
6,95E+08
2,85E+06
4,40E+09
l_ROA
0,013
-0,06
0,067
l_Total loans on total assets
0,631
0,136
0,026
0,963
l_Deposits on total assets
0,627
0,172
0,083
0,892
Other control variables
l_Gender quota soft
0,365
0,482
l_Gender quota hard
0,124
0,33
l_GDP
36275,21
19616,06
3485
1,29E+05
Banks’ board and risk-taking: does gender diversity matter?

8. Table 5: Gender and banks risk-taking
MAIN FINDINGS (1/5)
Table 5: Gender and banks risk-taking
Banks’ board and risk-taking: does gender diversity matter?

9. Table 6: Gender and banks risk-taking by level of risk
MAIN FINDINGS (2/5)
Table 6: Gender and banks risk-taking by level of risk
Banks’ board and risk-taking: does gender diversity matter?

10. Table 7: Critical mass and banks risk-taking by level of risk
MAIN FINDINGS (3/5)
Table 7: Critical mass and banks risk-taking by level of risk
Banks’ board and risk-taking: does gender diversity matter?

11. Table 8: Female sq and banks risk-taking by level of risk
MAIN FINDINGS (4/5)
Table 8: Female sq and banks risk-taking by level of risk
Banks’ board and risk-taking: does gender diversity matter?

12. MAIN RESULTS (5/5)
Figure 1: Gender diversity and Common equity ratio: U-shape relationship
Beyond a threshold of 34% appointing a women may increase bank’s risk or riskless banks
Banks’ board and risk-taking: does gender diversity matter?

13. Table 9: Robustness check with GMM
Banks’ board and risk-taking: does gender diversity matter?

14. DISCUSSION AND CONCLUSION
Our preliminary results confirmed that the relationship between gender diversity and risk is non-linear and has an inverted U-shape.
These findings are significant for banks showing risk under the median. Thus, beyond a certain level of risk gender diversity became insignificant in terms of risk.
Future improvements:
Inclusion of other robustness checks
Policy implications of gender diversity: mixed results of gender quotas
Future research could improve the analysis in terms of gender quotas. Studied are currently focused on performance of firms and are country-specific.
Banks’ board and risk-taking: does gender diversity matter?

15. Thank you for your attention! For comments and suggestions:
Banks’ board and risk-taking: does gender diversity matter?