Skip to main content
SpringerLink
Log in

Stability versus soundness: what matters for women central bank governors?

  • Published:
Economic Change and Restructuring Aims and scope Submit manuscript

Abstract

Using cross-country data, the paper examines the influence of women central bank governors (WCBGs) on bank soundness and stability. The evidence appears to suggest that WCBGs are more concerned with stability and less towards soundness. This response differs across advanced and emerging economies. We undertake a wide set of robustness checks and continue to find evidence in support of these findings.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Similar content being viewed by others

Notes

  1. The classification of countries as advanced and EMDEs is based on IMF (2019).

  2. The updated database on central bank governors obtained from the website [https://kof.ethz.ch/en/data/data-on-central-bank-governors.html.

References

  • Adams R, and Ferreira D (2009b) Women in the boardroom

  • Adams R, and Ragunathan V (2014) Lehman sisters. FIRN Research Paper. http://papers.ssrn.com/No=2380036.

  • Adams RB, Ferreira D (2009) Women in the boardroom and their impact on governance and performance. Financ Econ 94(2):291–309

    Article  Google Scholar 

  • Adams R, Ferreira D (2009a) Women in the boardroom and their impact on governance and performance. J Financ Econ 94:291–309

    Article  Google Scholar 

  • Adhikari BK, Agrawal A (2016) Does local religiosity matter for bank risk-taking? J Corp Finan 38:272–293

    Article  Google Scholar 

  • Adolph C (2013) Bankers, Bureaucrats and Central Bank Politics: The Myth of Neutrality. Cambridge University Press, Cambridge

    Book  Google Scholar 

  • Agbloyor E, Abor J, Adjasi C, Yawson A (2013) Exploring the causality links between financial markets and foreign direct investment in Africa. Res Int Bus Financ 28:118–134

    Article  Google Scholar 

  • Allen F, Demirguc-Kunt A, Klapper L, Peria MSM (2016) The foundations of financial inclusion: understanding ownership and use of formal accounts. J Financ Int 27:1–30

    Google Scholar 

  • Ashraf BN (2017) Political institutions and bank risk-taking behaviour. J Financ Stab 29:13–35

    Article  Google Scholar 

  • Athanasoglou PP, Brissimis SN, Delis MD (2008) Bank-specific, industry-specific and macroeconomic determinants of bank profitability. J Int Finan Markets Inst Money 18:121–136

    Article  Google Scholar 

  • Bank of Japan (2007). Financial System Report (September). Bank of Japan: Tokyo.

  • Baum CF, Caglayan M, Talavera O (2010) Parliamentary election cycles and the Turkish banking sector. J Bank Finance 34:2709–2719

    Article  Google Scholar 

  • Beck T, Behr P, Guettler A (2013) Gender and banking: are women better loan officers? Rev Financ 17:1279–1321

    Article  Google Scholar 

  • Becker GS (1964) Human capital: a theoretical and empirical analysis, with special reference to education. Columbia University Press, New York

    Google Scholar 

  • Berger AN, Bouwman CHS (2009) Bank liquidity creation. Rev Financ Stud 22:3779–3837

    Article  Google Scholar 

  • Berger AN, DeYoung R (1997) Problem loans and cost efficiency in commercial banks. J Bank Financ 21(6):849–870

    Article  Google Scholar 

  • Berger AN, Turk-Ariss R (2015) Do depositors discipline banks and did government actions during the recent crisis reduce this discipline? An international perspective. J Financ Serv Res 48:103–126

    Article  Google Scholar 

  • Berger A, Klapper L, Turk-Ariss R (2009) Bank competition and financial stability. J Financ Serv Res 35(2):99–118

    Article  Google Scholar 

  • Berger AN, Kick T, Schaeck K (2014) Executive board composition and bank risk taking. J Corp Finan 28:48–65

    Article  Google Scholar 

  • Berger A, Ghoul SE, Guedhami O, Roman R (2017) Internationalization and bank risk. Manage Sci 63:2283–2301

    Article  Google Scholar 

  • Berger AN, Bouwman C, Kick T, Schaeck K (2016) Bank liquidity creation following regulatory interventions and capital support. J Fin Intermedia 26:115–141

    Article  Google Scholar 

  • Bodea C, Kerner A (2022) Fear of inflation and gender representation in central banking. Eur J Polit Econ 74:102192

    Article  Google Scholar 

  • Boyd J, de Nicolo G (2005) The theory of bank risk-taking and competition revisited. J Financ 60:1329–1343

    Article  Google Scholar 

  • Bystrom HNE (2004) The market’s view on the probability of banking sector failure: cross-country comparisons. J Int Finan Markets Inst Money 14:419–438

    Article  Google Scholar 

  • Calice P, Leonida L, Muzzupappa E (2021) Concentration-stability vs concentration-fragility: new cross-country evidence. J Int Financ Markets Instit Money 74:101411

    Article  Google Scholar 

  • Cardillo G, Onali E, Torluccio G (2021) Does gender diversity on banks’ boards matter? Evidence from public bailouts. J Corp Financ 71:101560

    Article  Google Scholar 

  • Carstens, A. (2018). Deposit insurance and financial stability: old and new challenges. Keynote address at the Annual Conference on "Deposit insurance and financial stability: Recent financial topics". BIS: Basel.

  • Carter DA, Simkins B, Simpson W (2003) Corporate governance, board diversity and firm value. Financ Rev 38:33–53

    Article  Google Scholar 

  • Carter D, D'Souza F, Simkins B, Simpson G (2010) The gender and ethnic diversity of US boards and board committees and firm financial performance. Corporate Governance: An International Review 18:396–414

    Article  Google Scholar 

  • Casu, B., di Petro, F., and Trujillo-Ponce, A. (2016). Liquidity creation and bank capital in the Eurozone. SSRN Paper No.2828619.

  • Chen L, Li H, Liu FH, Zhou Y (2021) Bank regulation and systemic risk: cross country evidence. Rev Quant Financ Acc 57:353–387

    Article  Google Scholar 

  • Claessens S, Dell’Ariccia G, Igan D, Laeven L (2010) Cross-country experiences and policy implications from the global financial crisis. Econ Policy 62:267–293

    Article  Google Scholar 

  • Claessens S, Coleman N, Donnelly M (2018) Low-for-long interest rates and banks’ interest margins and profitability: cross-country evidence. J Financ Intermed 35A:1–16

    Article  Google Scholar 

  • Correa R, Goldberg L (2022) Bank complexity, governance and risk. J Bank Financ 134:106013

    Article  Google Scholar 

  • Correia S (2017) REGHDFE: Stata module for linear and instrumental-variable/gmm regression absorbing multiple levels of fixed effects. Statistical Software Components s457874, Boston College, USA

  • Crowe C, Meade EE (2008) Central bank independence and transparency: evolution and effectiveness. Eur J Polit Econ 24:763–777

    Article  Google Scholar 

  • Cukierman A (1992) Measuring the independence of central banks and its effects on policy outcomes. World Bank Econ Rev 6:353–398

    Article  Google Scholar 

  • Davis P, Karim D, Noel D (2020) The bank capital-competiiton-risk nexus: a global perspective. J Int Financ Markets Instit Money 65:101169

    Article  Google Scholar 

  • de Alonso PA, Vallelado E (2008) Corporate governance in banking: the role of the board of directors. J Bank Financ 32:2570–2580

    Article  Google Scholar 

  • De Young R, Distinguin I, Tarazi A (2018) The joint regulation of bank liquidity and bank capital. J Financ Intermed 34:32–46

    Article  Google Scholar 

  • Demirguc Kunt A, Kane E, and Laeven L (2014) Deposit insurance database. IMF Working Paper No.118. IMF: Washington DC

  • Demirgüç-Kunt A, Kane E, Laeven L (2008) Determinants of deposit-insurance adoption and design. J Financ Intermed 17:407–438

    Article  Google Scholar 

  • Demirguc-Kunt A, Detragiache E (1998) The determinants of banking crises in developed and developing economies. IMF Staff Pap 45:81–109

    Article  Google Scholar 

  • Demirguc-Kunt A, Detragiache E (2002) Does deposit insurance increase banking system stability? J Monet Econ 49:1373–1406

    Article  Google Scholar 

  • Díez-Esteban JM, Farinha JB, Garcia-Gomez CD, Mateus C (2021) Does board composition and ownership structure affect banks’ systemic risk? European evidence. J Bank Regulat. https://doi.org/10.1057/s41261-021-00148-2]

    Article  Google Scholar 

  • Dincer NN and Eichengreen B (2007) Central bank transparency: where, why, and with what effects?. NBER Working Paper No. 13003. Cambridge: MA

  • Distinguin I, Roulet C, Tarazi A (2013) Bank regulatory capital and liquidity: evidence from US and European publicly traded banks. J Bank Financ 37:3295–3317

    Article  Google Scholar 

  • Doumpos M, Gaganis C, Pasiouras F (2015) Central bank independence, financial supervision structure and bank soundness: an empirical analysis around the crisis. J Bank Financ 61:S69–S83

    Article  Google Scholar 

  • Dreher A, Strum J-E, de Haan J (2010) When is a central bank governor replaced? Evidence based on a new data set. J Macroecon 32:766–781

    Article  Google Scholar 

  • Eckel C, Grossman P (2008) Men, women and risk aversion: Experimental evidence. Handbook of Experimental Economics Results, North Holland, Amsterdam, pp 1061–1073

    Google Scholar 

  • Eijffinger SC, Geraats PM (2006) How transparent are central banks?’. Eur J Polit Econ 22:1–21

    Article  Google Scholar 

  • European Central Bank (2017). Guidance to banks on non-performing loans (March). ECB: Frankfurt.

  • Faccio M, Marchica MT, Mura R (2016) CEO gender and corporate risk-taking, and the efficiency of capital allocation. J Corp Finan 39:193–209

    Article  Google Scholar 

  • Fama E, Jensen M (1983) Separation of ownership and control. J Law Econ 26:301–325

    Article  Google Scholar 

  • Ferrera FM, Angino S (2021) Does clarity make central bank more engaging? Lessons from ECB communication. Eur J Polit Econ 74:102146

    Article  Google Scholar 

  • Filippin A, Crosetto P (2016) A reconsideration of gender differences in risk attitudes. Manage Sci 62:3138–3160

    Article  Google Scholar 

  • Flannery M, Rangan K (2008) What caused the bank capital build-up of the 1990s? Rev Financ 12:391–429

    Article  Google Scholar 

  • Ghosh S (2017a) Does central bank governors term in office matter for macroprudential policies? Evidence from MENA banks. Res Int Bus Financ 40:34–51

    Article  Google Scholar 

  • Ghosh S (2017b) Why is it a man’s world, after all? Women on bank boards in India. Econ Syst 41:109–121

    Article  Google Scholar 

  • Ghosh S, Das A (2005) Market discipline, capital adequacy and bank behaviour. Econ Pol Wkly 2005:1210–1215

    Google Scholar 

  • Gibson R, Michayluk D, Van de Venter G (2013) Financial risk tolerance: an analysis of unexplored factors. Financ Serv Rev 22(1):23–50

    Google Scholar 

  • Gohlmann S, Vaubel R (2007) The educational and occupational background of central bankers and its effect on inflation: an empirical analysis. Eur Econ Rev 51:925–941

    Article  Google Scholar 

  • Goodhart C, Schoenmaker D (1995) Should the functions of monetary policy and banking supervision be separated? Oxf Econ Pap 47:539–560

    Article  Google Scholar 

  • Gul F, Srinidhi B, Ng AC (2011) Does board gender diversity improve the informativeness of stock prices? J Account Econ 15:314–338

    Article  Google Scholar 

  • Gulamhussen MA, Santa SF (2015) Female directors in bank boardrooms and their influence on performance and risk-taking. Glob Financ J 28:10–23

    Article  Google Scholar 

  • Hayat MA, Farvaque E (2011) When are central bankers removed? Revue Economique 62:471–478

    Article  Google Scholar 

  • International Monetary Fund (2019) World Economic Outlook (April). IMF, Washington DC

    Google Scholar 

  • International Monetary Fund (2020) Global Financial Stability Report (Chapter 4: Low rates, low profits). IMF, Washington DC

    Google Scholar 

  • Jackson (1999a). Jackson, P. (1999a). Capital requirements and bank behaviour: The

  • Jensen MC, Meckling WH (1976) Theory of the firm: managerial behaviour, agency costs and ownership structure. J Financ Econ 3:305–360

    Article  Google Scholar 

  • Jha CK, Sarangi S (2018) Women and corruption: what positions must they hold to make a difference? J Econ Behav Organ 151:219–233

    Article  Google Scholar 

  • Kanagaretnam K, Lobo GJ, Wang C, Whalen D (2015) Religiosity and risk-taking in international banking. J Behav Exp Financ 7:42–59

    Article  Google Scholar 

  • Kaufmann D, Kraay A, and Mastruzzi, M (2010) The worldwide governance indicators: Methodology and analytical issues. Policy Research Working Paper No.5430. The World Bank: Washington DC

  • Kutan AM, Samargandi N, Sohag K (2017) Does institutional quality matter for financial development and growth? Further evidence from MENA countries. Aust Econ Pap 56:228–248

    Article  Google Scholar 

  • Kuttner KN, Posen AS (2010) Do markets care who chairs the central bank? J Money, Credit, Bank 42:347–371

    Article  Google Scholar 

  • La Porta R, Lopez de Silanes F, Shleifer A, Vishny R (1997) Legal determinants of external finance. J Financ 52:1131–1150

    Article  Google Scholar 

  • La Porta R, Lopez-de-Silanes F, Shleifer A (2008) The economic consequences of legal origins. J Econ Literat 46:285–332

    Article  Google Scholar 

  • Laeven L and Valencia F (2018) Systemic banking crises revisited. IMF Working Paper No. 206. IMF: Washington DC

  • Laeven L (2011) Banking crises: a review. Ann Rev Financ Econ 3(1):17–40

    Article  Google Scholar 

  • Leung WS, Taylor N, Evans KP (2015) The determinants of bank risks: evidence from the recent financial crisis. J Int Finan Markets Inst Money 34:277–293

    Article  Google Scholar 

  • Li H, Liu H, Veld C (2019) The effects of bank regulation stringency on seasoned equity offering announcements. J Int Money Financ 91:71–85

    Article  Google Scholar 

  • Li X, Liu Z, Peng Y, and Xu Z (2020) Bank risk-taking and monetary policy transmission: Evidence from China. Federal Reserve Bank of San Francisco Working Paper No.27. FRB San Francisco

  • Liu Y, Wei Z, Xie F (2014) Do women directors improve firm performance in China? J Corp Finan 28:169–184

    Article  Google Scholar 

  • Lu Y, Nikolaev V (2021) Expected loan loss provisioning: an empirical model. Account Rev 97:319–346

    Article  Google Scholar 

  • Luu HN, Vo XV (2021) The impact of supervisory stress tests on bank ex-ante risk-taking behaviour: empirical evidence from a quasi-natural experiment. Int Rev Financ Anal 75:101586

    Article  Google Scholar 

  • Maechler A, McDill K (2006) Dynamic depositor discipline in US banks. J Bank Finance 30:1871–1898

    Article  Google Scholar 

  • Markoulis S, Martzoukos S, Patsalidou E (2020) Globally systemically important banks regulation: blessing or curse? Glob Financ J. https://doi.org/10.1016/j.gfj.2020.100580

    Article  Google Scholar 

  • Masciandaro D, Profeta P and Romelli D (2018) Do women matter in monetary policymaking? Baffi Carefin Centre, Bocconi University, Working Paper No. 88. Bocconi: Italy.

  • Masciandaro D, Romelli D (2018) Central bankers as supervisors: do crises matter? Eur J Polit Econ 52:12–140

    Article  Google Scholar 

  • Micco A, Panizza U, Yañez M (2007) Bank ownership and performance. Does politics matter? J Bank Financ 31:219–241

    Article  Google Scholar 

  • Mirzaei A, Moore T, Liu G (2013) Does market structure matter on bank’ profitability and stability? Emerging vs. advanced economies. J Bank Financ 37:2920–2937

    Article  Google Scholar 

  • Mishkin F (1999) Financial consolidation: dangers and opportunities. J Bank Financ 23:675–691

    Article  Google Scholar 

  • Mishra P, Rashef A (2019) How does central bank governors matter? Regulation and the financial sector. J Money, Credit, Bank 51:369–402

    Article  Google Scholar 

  • Moser C, Dreher A (2010) Do markets care about central bank governor changes? Evidence from emerging markets. J Money Credit, Bank 42:1589–1612

    Article  Google Scholar 

  • De Nicoló G (2000) Size, charter value and risk in banking: an international perspective. International Finance Discussion Paper 689. Board of Governors of the Federal Reserve System. Federal Reserve: USA.

  • Nikolaj SS, Drazenovic BO, Buterin V (2022) Deposit insurance, banking stability and banking indicators. Econ Res. https://doi.org/10.1080/1331677x.2022.2033130

    Article  Google Scholar 

  • Nyugen H, Faff R (2006) Impact of board size and board diversity on firm value: Australian evidence. Corp Ownersh Control 4:24–32

    Google Scholar 

  • Olszak M, Pipien M, Kowalska I, Roszkowska S (2017) What drives heterogeneity of cyclicality of loan-loss provisions in the EU? J Financ Serv Res 51:55–96

    Article  Google Scholar 

  • Osei-Tutu F, Weill L (2021) How language shapes bank risk taking. J Financ Serv Res 59:47–68

    Article  Google Scholar 

  • Ozili PK (2020) Does competence of central bank governors influence financial stability? Future Bus J 6:24

    Article  Google Scholar 

  • Pathan S, Faff R (2013) Does board structure in banks really affect their performance? J Bank Financ 37:1573–1589

    Article  Google Scholar 

  • Peek J, Rosengren E, Tootell G (1999) Is banking supervision central to central banking? Quart J Econ 114:629–653

    Article  Google Scholar 

  • Pfeffer J, Salancik GR (1978) The external control of organisations: a resource dependence perspective. Harper and Row, New York

    Google Scholar 

  • Reserve F (2020) Supervision and regulation report (November). Board of Governors of the Federal Reserve, Washington DC

    Google Scholar 

  • Reserve Bank of India (2017). Financial Stability Review (November). RBI: Mumbai.

  • Roberts MR, Whited TM (2013) Endogeneity in empirical corporate finance. In: Constantinides GM, Harris M, Stulz RM (eds) Handbook of the economics of finance. Elsevier, North Holland, pp 493–572

    Chapter  Google Scholar 

  • Sahay R and Cihak M (2018) Women in finance: a case for closing gaps. IMF Staff Discussion Note No.5. IMF: Washington DC

  • Salas V, Saurina J (2002) Credit risk in two institutional regimes: Spanish commercial and savings banks. J Financ Serv Res 22(3):203–224

    Article  Google Scholar 

  • Sapienza P, Zingales L, Maestripieri D (2009) Gender differences in financial risk aversion and career choices are affected by testosterone. Proc Natl Acad Sci 106:15268–15273

    Article  Google Scholar 

  • Sheng A (1991) The role of the central bank in banking crises: an overview. In: Downes P, Vaez-Zadeh R (eds) The evolving role of central banks. IMF, Washington DC, pp 193–217

    Google Scholar 

  • Shrieves RE, Dahl D (1992) The relationship between risk and capital in commercial banks. J Bank Financ 16:439–457

    Article  Google Scholar 

  • Singh V, Vinnicombe S (2004) Why so few women directors in top UK boardrooms? Evidence and theoretical explanations. Corp Gov Int Rev 12:479–488

    Article  Google Scholar 

  • Skala D, Weill L (2018) Does CEO gender matter for bank risk? Econ Syst 42:64–74

    Article  Google Scholar 

  • Violon A, Durant D, Toader O (2020) The impact of the designation of globally systematically important banks on their business model. Int J Cent Bank 16:95–142

    Google Scholar 

  • Walsh C (2002) When should central bankers be fired? Econ Gov 3:1–21

    Article  Google Scholar 

  • Wiedner K (2020) A common european deposit insurance system on the path towards a steady-state banking union. EDIS, NPLs. De Gruyter, Sovereign Debt and Safe Assets. Berlin, pp 39–58

    Google Scholar 

  • World Bank (2018) Financial development and structure dataset (Updated November). The World Bank, Washington, DC

    Google Scholar 

Download references

Author information

Authors and Affiliations

  1. Qatar Central Bank, Doha, Qatar

    Saibal Ghosh

Authors
  1. Saibal Ghosh
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Saibal Ghosh.

Ethics declarations

Conflict of interest

This is to certify that there are no actual or potential conflicts of interest including any financial, personal or other relationships with other people or organizations within three years of beginning the submitted work that could inappropriately influence, or be perceived to influence, the work.

Additional information

Publisher's Note

Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.

The views expressed and the approach pursued in the paper are strictly personal. I would like to profusely thank, without implicating, for the careful and detailed comments on an earlier draft which greatly improved the exposition and analysis. Needless to state, the views expressed and the approach pursued in the paper are entirely personal.

Rights and permissions

Springer Nature or its licensor (e.g. a society or other partner) holds exclusive rights to this article under a publishing agreement with the author(s) or other rightsholder(s); author self-archiving of the accepted manuscript version of this article is solely governed by the terms of such publishing agreement and applicable law.

Reprints and permissions

About this article

Check for updates. Verify currency and authenticity via CrossMark

Cite this article

Ghosh, S. Stability versus soundness: what matters for women central bank governors?. Econ Change Restruct 56, 2315–2338 (2023). https://doi.org/10.1007/s10644-023-09514-8

Download citation

  • Received:

  • Accepted:

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s10644-023-09514-8

Keywords

JEL Classification

Search

Navigation