Gender Diversity, Banks‘ Performance, and Stability across Central and Eastern European Countries

Abstract

This paper investigates the impact of board diversity on the performance and riskiness of banks across Central and Eastern European (CEE) countries. We emphasize identifying features of the board structure that could increase performance and lower the possible losses of banks. Using a unique, hand-collected dataset of 156 banks from CEE countries during 2005-2012, we assess whether banks with more female directors or chairwomen display lower risk and higher performance. The analysis first shows that banks with a chairwoman and a higher proportion of females among the members of a bank's board record a higher level of profitability and tend to have a lower level of credit losses. Additionally, the results suggest that the higher proportion of females among members on bank boards, on average, the higher the level of bank stability during the financial crisis of 2008. Our results also reveal that the regulatory framework in the host-country affects the relationship between board gender diversity and bank performance and risk.