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

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). Forthcoming, Journal of Corporate Finance, 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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