Does gender diversity in bank boards matter? Evidence from public bailouts

Abstract

We are the first to examine the impact of gender diversity in bank boards on the probability and size of public bailouts. Our findings, based on a sample of listed European banks over the period 2007-2013, suggest that banks with a more gender-diverse board are less likely to receive a public bailout, and receive a lower amount of bailout funds (in the form of credit lines and capital injections) as a percentage of total assets. Specifically, an increase by one standard deviation in gender diversity decreases the probability of a bailout by at least 4%. Gender diversity is also negatively related to bank risk as proxied by the ratio of non-performing loans to total loans and positively related to bank profitability as proxied by ROA. Furthermore, consistent with previous literature, we also find that more gender-diverse bank boards have higher payout ratios, consistent with an agency costs hypothesis. Our findings are robust to a variety of econometric techniques, including instrumental-variables estimation.