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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 - 24-26 ottobre.
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Banks’ board and risk-taking: does gender diversitymatter? Giuliana Birindelli, University of Chieti-Pescara Helen Chiappini, University of Chieti-Pescara Marco Savioli, University of Salento, RCEA 60ª RSA - Università di Palermo - 24-26 ottobre
BACKGROUND AND RATIONALITY OF THE ANALYSIS • The global financialcrisishasresulted in: • the strengthening of corporate governancemechanisms(De LaroisièrCommittee 2009; Basel Committee on Banking Supervision 2010) • the implementation of diversifiedboards, atleast in terms of age, professionalexperience and gender (European Directive 2013/36/EU). • Manygovernmentshavemeanwhileestablishedgender quotasby law over the last years (e.g. Norway, Spain, France, and Italy). • Theseeventshavebeenaccompanied by a strong academicdebateon the impact of gender diversity on firmrisk. • Board diversity: • Pros: diversitybrings a variety of backgrounds, skills and perspectives to the boardroom, thereforedirectors and companies may benefit from these diverse social and occupationalexperiences (Anderson, Reeb, Upadhyay, & Zhao 2011). • Cons: the cost of diversity – in terms of communication, coordination and conflictamongdirectors with different backgrounds - exceedsits benefits (Putnam 2007). Banks’ board and risk-taking: does gender diversitymatter?
LITERATURE REVIEW (1/2) • Fewstudies on effects of diversity in the banking sector • Thosestudies (generally) focus on a specific country • Results are mixed • Non-linear relationshipbetween gender and riskisunderinvestigatedlike the impact of gender diversity on differentlevels of bank’srisk Table 2: Gender and banks risk-taking Table 1: Gender and corporates risk taking Banks’ board and risk-taking: does gender diversitymatter?
LITERATURE REVIEW (2/2) Table 3: Gender and banks risk-taking Banks’ board and risk-taking: does gender diversitymatter?
AIM AND HYPOTHESES DEVELOPMENT Aim The aim of thisresearchis to investigate the relationshipbetween gender diversity and banks’ risktaking. Focus: Riskless and riskerbanks Non linear relationshipbetween gender diversity and risk Twohypotheses: H01: The relationshipbetween gender diversity and riskisaffected by the level of risk H02: Thereis a non linear relationshipbetween gender diversity and risk Banks’ board and risk-taking: does gender diversitymatter?
DATA AND METHOD (1/2) • Wecollect data on listedbanks from 40 countries over the years 2008 -2016. • Data on riskmeasures, boards and bankscharacteristics are from Thomson Reuters Datastream. • Data on Grossdomesticproducts per capita (GDP) are from World Bank. • Fourmeasures of risks: • Common equity ratio • Tier1 on totalassets • NPLs ratio • Price volatility • Gender diversityvariables: • Femaledirectors • Massa women • Womensq • We use Panel FixedEffectEstimation Banks’ board and risk-taking: does gender diversitymatter?
DATA AND METHOD (2/2) Table 4: Descriptivestatistics Banks’ board and risk-taking: does gender diversitymatter?
MAIN FINDINGS (1/5) Table 5: Gender and banks risk-taking Banks’ board and risk-taking: does gender diversitymatter?
MAIN FINDINGS (2/5) Table 6: Gender and banks risk-taking by level of risk Banks’ board and risk-taking: does gender diversitymatter?
MAIN FINDINGS (3/5) Table 7: Critical mass and banks risk-taking by level of risk Banks’ board and risk-taking: does gender diversitymatter?
MAIN FINDINGS (4/5) Table 8: Female sq and banks risk-taking by level of risk Banks’ board and risk-taking: does gender diversitymatter?
MAIN RESULTS (5/5) Figure 1: Gender diversity and Common equity ratio: U-shaperelationship Beyond a threshold of 34% appointing a womenmayincreasebank’srisk or risklessbanks Banks’ board and risk-taking: does gender diversitymatter?
ROBUSTNESS CHECK Table 9: Robustnesscheck with GMM Banks’ board and risk-taking: does gender diversitymatter?
DISCUSSION AND CONCLUSION • Ourpreliminaryresultsconfirmedthat the relationshipbetween gender diversity and riskis non-linear and has an inverted U-shape. • Thesefindings are significant for banksshowingrisk under the median. Thus, beyond a certainlevel of risk gender diversitybecameinsignificant in terms of risk. • Future improvements: • Inclusion of otherrobustnesschecks • Policy implications of gender diversity: mixedresults of gender quotas • Future researchcouldimprove the analysis in terms of gender quotas. Studied are currentlyfocused on performance of firms and are country-specific. Banks’ board and risk-taking: does gender diversitymatter?
Thankyou for yourattention! For comments and suggestions: marco.savioli@unisalento.it Banks’ board and risk-taking: does gender diversitymatter?