Critical Mass And Bank Risk: Examining The Threshold Effect Of Women On Boards In The Mena Region

Sedki Zaiane ()
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Sedki Zaiane: National Research University Higher School of Economics

HSE Working papers from National Research University Higher School of Economics

Abstract: This study investigates the impact of women on boards on bank risk-taking in the MENA context and whether a critical mass of women on boards affects bank risk. The influence of woman directors on bank risk is studied using a sample of 126 commercial banks for the period 2007–2020. A dynamic panel threshold method is adopted in order to investigate the critical mass of woman on boards and it is impact on risk. The findings suggest a nonlinear association between women on boards and bank risk-taking confirming the critical mass hypotheses. The results show that the percentage of women on the board matter in shaping risk decisions. More precisely, we find that there is a negative and significant impact only when the proportion of women exceeds a certain threshold. A set of robustness checks confirms our findings. The findings highlight the importance of achieving a critical mass of women on boards to influence corporate governance and risk management. Therefore, policies should aim to surpass the empirically determined threshold to achieve a meaningful reduction in risk-taking. While most studies on this topic either assume a specific critical percentage or treat the relationship as linear, this research uses a threshold regression model to empirically determine the threshold that goes beyond simply assuming a critical percentage.

Keywords: Women on Boards; Bank Risk-Taking; Critical Mass; Panel Threshold Regression; MENA region (search for similar items in EconPapers)
JEL-codes: Z (search for similar items in EconPapers)
Pages: 23 pages
Date: 2025
New Economics Papers: this item is included in nep-ara
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Published in WP BRP Series: Financial Economics / FE, March 2025, pages - 23

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