Could 'Lehman Sisters' Reduce Bank Risk-Taking? International Evidence

47 Pages Posted: 20 May 2021 Last revised: 22 Jan 2022

See all articles by Anh Hoang

Anh Hoang

Western Sydney University

Qiongbing Wu

Western Sydney University

Date Written: January 18, 2022


Since the global financial crisis triggered by the collapse of Lehman Brothers, board gender diversity has attracted growing attention among academia and policy makers. The “Lehman Sisters” hypothesis argues for more women representation on bank director board based on the stereotyped gender gap in risk preference, which has been widely supported by empirical studies on nonfinancial firms. However, due to the constraint of data unavailability, empirical research on board gender diversity and bank risk-taking is relatively scarce and mostly confined to individual developed markets with inconclusive findings. In this paper we examine the impact of board gender diversity on bank risk-taking using a large hand-collected dataset covering 480 commercial banks across 18 developed and 21 developing countries over the period 2007-2016. We find lower bank risk-taking is associated with greater board gender diversity, supporting the “Lehman Sisters” hypothesis in the international context; however, this effect is significantly weakened in countries with more hostile perception toward working women. Our findings help to reconcile existing contradictory empirical evidence from different countries by highlighting the importance of cultural effect. We also confirm the critical threshold of three female directors to play a significant role in reducing bank risk-taking, providing novel international evidence in support of the critical mass theory from the banking sector. Our findings have important implications for policy makers and bank strategic risk management.

Keywords: Board gender diversity, Bank risk-taking, Critical mass theory, Lehman Sister hypothesis, Corporate governance

JEL Classification: G21, G32, G34, M14

Suggested Citation

Hoang, Anh and Wu, Qiongbing, Could 'Lehman Sisters' Reduce Bank Risk-Taking? International Evidence (January 18, 2022). Available at SSRN: or

Anh Hoang

Western Sydney University ( email )

PO Box 10
Parramatta, NSW 2747

Qiongbing Wu (Contact Author)

Western Sydney University ( email )

169 Macquarie St.
Sydney, NSW 2150
+61-2-96859805 (Phone)
+61-2-96859105 (Fax)


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