Board Gender Diversity and Risk Taking: Evidence from European Banks

Abstract

The focus of this study is to examine the impact of board gender diversity on the risk – taking activities of the banks. The research investigates the impacts of various aspects of gender diversity in boards on the risk relevant decisions taking European countries into account. Out of assorted types of risk that a bank faces credit risk, operational risk, insolvency risk and the liquidity risk have been highlighted. Also, various aspects of corporate governance that gained the popularity as the aftermath of global financial crisis like women leadership or their demographical attributes have been taken into account in the context of risk management of the banks. The results show that women on board significantly reduce the bank risks. These results implicate that when women are given the top positions in the hierarchy, they place their impact on the risk assessments and afterwards in the selection of the riskier opportunities and bar the overdue risk acceptance. The study is made on a comprehensive sample of listed banks across 21 European countries covering all its cardinal directions during 2010 – 2018. The opaqueness of banks’ business makes this entity distinct from the corporate industry and hence it is studied in a separate research line. This study will be an attempt to abate the disparity found in the research line that caters the banking industry