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Women’s leadership impact on risks and financial performance in banking: evidence from the Southeast Asian Countries

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Abstract

In this article we investigate the effect of the presence of women on the board of directors and in executive positions on the risk and profitability of75 banks in ten ASEAN countries during the period of 2002–2018.We find that banks with more women in executive positions show higher capital risk, i.e., Z-score and capital ratio. However, the women-led banks have higher market to book ratios and they are more profitable in terms of return on assets (ROA) and return on equity (ROE). Furthermore, our findings shed light on the relationship between gender diversity and financial decision-making in the company by highlighting that the Southeast Asian Nations (ASEAN) banks with more executives’ women are more risky and have higher profits than the men-led banks. We also find that the proportion of women on the board standing as a director or a chair reduces performance in ROA and ROE. Bank performance measured by market-to-book (PB), is the lowest when there are females on the board. This highlights the gender differences in investment behavior and the women’s needs in banks at Asian region. Given that bank performance has a direct effect on the stability of the financial system as well as on economic growth in the country, it is essential for the regulatory authorities to assess variety of sources which can improve performance and governance in (ASEAN) banks.

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Notes

  1. World bank: https://data.worldbank.org/indicator/SL.TLF.TOTL.FE.ZS?name_desc=true.

  2. The link: https://www.2020wob.com/sites/default/files/2020GDI-2015Report.pdf.

  3. 8 countries from the 10 analyzed are considered as “Frontier and Emerging Asia”: Indonesia, Malaysia, the Philippines, Thailand, Vietnam, Cambodia, Laos, and Myanmar [International Monetary Fund (IMF)].

  4. According to the Human Development Reports of United Nations (2016): Reproductive health is proxied by maternal mortality ratio (MMRatio) and adolescent fertility rates (births per 1000 women ages 15–19), Empowerment is proxied by percentage of parliamentary given to women and percentage of adult women and men aged 25 years and above with at least some secondary education, Economic status is measured as labor market participation and proxied by labor force participation rate of women and men populations aged 15 years and above (http://hdr.undp.org/en/2016-report).

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  1. Faculty of Economics and Management of Tunis, Tunis El Manar University, Tunis, Tunisia

    Ahmed Bouteska

  2. Department of Economics and Finance, College of Business Administration, University of Bahrain, Zallaq, Bahrain

    Mehdi Mili

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  1. Ahmed Bouteska
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Bouteska, A., Mili, M. Women’s leadership impact on risks and financial performance in banking: evidence from the Southeast Asian Countries. J Manag Gov 26, 1213–1244 (2022). https://doi.org/10.1007/s10997-021-09594-6

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