Governance, Gender Diversity, and Banking Performance: New Evidence from North African and GCC Countries

Abstract

This study assesses the impact of board gender diversity on financial performance of conventional banks from nine North African and Gulf Cooperation Council countries. Using a sample of 61 banks covering the period 2009–2021, the system GMM results show a positive and significant impact of gender diversity on banks’ financial performance as measured by the return on assets and return on equity. We also identify transmission channels through which the presence of female directors enhances banking performance and investigate the nonlinearity of the relationship between board gender diversity and financial performance. The results suggest that female directors contribute to enhancing cost monitoring and are associated to a reduction in the risk exposure of banking firms. Our estimates also show that the gender diversity–performance relationship is nonlinear and that the positive effect of gender diversity intensifies as the number of female directors increases to reach a threshold at a female board composition of 42.1%.