Gender Board Diversity and the Cost of Bank Loans

52 Pages Posted: 24 Sep 2019

See all articles by Panagiotis Karavitis

Panagiotis Karavitis

University of Glasgow - Adam Smith Business School

Sotirios Kokas

University of Essex - Essex Business School

Serafeim Tsoukas

University of Glasgow - Adam Smith Business School

Date Written: September 1, 2019

Abstract

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

Suggested Citation

Karavitis, Panagiotis and Kokas, Sotirios and Tsoukas, Serafeim, Gender Board Diversity and the Cost of Bank Loans (September 1, 2019). Available at SSRN: https://ssrn.com/abstract=3453680 or http://dx.doi.org/10.2139/ssrn.3453680

Panagiotis Karavitis

University of Glasgow - Adam Smith Business School ( email )

University Avenue
Glasgow
Glasgow, West End G12 8QQ
United Kingdom

HOME PAGE: http://https://www.gla.ac.uk/schools/business/staff/panagiotiskaravitis/

Sotirios Kokas (Contact Author)

University of Essex - Essex Business School ( email )

Wivenhoe Park
Colchester, CO4 3SQ
United Kingdom

Serafeim Tsoukas

University of Glasgow - Adam Smith Business School ( email )

Glasgow, Scotland
United Kingdom

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