Gender Board Diversity and the Cost of Bank Loans
Forthcoming, Journal of Corporate Finance
52 Pages Posted: 24 Sep 2019 Last revised: 20 Sep 2021
Date Written: September 1, 2019
We examine the relationship between female board representation and the cost of lending, using a dataset that contains 13,714 loans originated by 386 banks matched with 2,432 non-financial firms over the period 1999 to 2013. We find that firms with female directors command lower loan spreads. In addition, female independent directors have a stronger impact on lowering spreads compared to female directors' other attributes. However, as firms build relationships with their lenders this effect becomes less potent. Finally, when we introduce firm-level heterogeneity we document that changes in gender diversity exert a stronger impact on the cost of lending in the case of financially constrained firms, especially for relationship borrowers.
Keywords: Gender diversity, Board of directors, Bank loans, Relationship lending
JEL Classification: G21, G30
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