Board Diversity and Women Directors’ Attributes: New Insights from Bank Risk, Stability and Stock Market Valuations with Evidence from Alternative Banking Models

Abstract

This thesis investigates board diversity and its association with bank stability and market value, employing a unique sample drawn from countries operating dual banking systems (Islamic and conventional). Three studies are presented that examine comprehensive diversity indicators previously untested in the literature. Study 1 presents an assessment of measures of board diversity (gender, education, nationality) in relation to three bank measures of stability for listed and unlisted banks. Studies 2 and 3 focus on listed banks and board gender diversity, alongside unique attributes for women directors reflecting monitoring, independence, and leadership, considered together with financial expertise, nationality, and education in relation to stock market valuation (Study 2) and five measures of bank risk (Study 3). The findings from Study 1 provide strong evidence that banks with women directors and directors with doctorates exhibit high bank stability. In contrast, foreign directors are significantly negatively associated with bank stability. The effects of directors’ gender, nationality, and education on bank stability differ by bank type. Study 2 provides strong evidence that having women directors on the board is positively associated with bank value for conventional banks, but not for Islamic banks, as are independent women directors, those with a high level of education, and those holding accounting/finance qualifications. Women chairpersons have no significant association, but foreign women directors and those who graduated from foreign universities are negatively associated with bank value. Study 3 shows that the presence of women directors and independent women directors is negatively associated with bank risk. However, there is significant evidence that women directors with postgraduate degrees and those with accounting and finance qualifications significantly reduce bank risk in conventional banks, although this relationship only holds for market risk within Islamic banks. The findings offer valuable new insights and important policy implications for international banking research, investors, and regulators.