Women as ‘Gold Dust’: Gender Diversity in Top Boards and the Performance of Italian Banks

Abstract

European comparisons for the 2000s show that Italy was among the EU countries where women were least represented in bank boardrooms. Using a unique dataset on Italian banks over the period 1995-2010, this paper investigates the effects of gender diversity in boards on bank riskiness and economic performance. Taking account of omitted variables and reverse causality problems, as a source of endogeneity, our main econometric findings suggest that gender diversity may have a positive impact on the quality of credit and, to a lesser extent, on profitability. Both results may be driven by women’s higher risk aversion and their attitude to monitoring activities. Our study therefore suggests that women are ‘gold dust’ for Italian banks and that increasing their presence may be beneficial to economic performance.

Keywords: banking, corporate governance, gender diversity, board of directors

JEL Classification: G21, G34, J16