Board Diversity on Bank Stability: The Impact of Cultural Openness to Diversity

Rana Hamaid Alharbi

Chapter 3 in Banking Resilience:New Insights on Corporate Governance, Sustainability and Digital Innovation, 2024, pp 101-151 from World Scientific Publishing Co. Pte. Ltd.

Abstract: This chapter examines how diversity in the board of directors (gender, nationality, and education level) influences bank stability (proxied by several measures of risk and financial performance) with the mediating effect of cultural openness to diversity in different countries. This study employs a unique sample from 14 countries from 2007 to 2017. The results show that women directors consistently promote high bank stability within countries that are more open to diversity. However, foreign directors and those holding a Ph.D. show a negative impact on bank stability in this set of countries. In the full sample, the results show a positive association between women directors and directors holding a Ph.D. and bank stability. However, foreign directors have a significantly negative association with bank stability. The findings offer new insights into board diversity and bank stability with important policy implications for regulators governing countries with dual banking systems in different cultures oriented toward diversity.

Keywords: Corporate Governance, Board Characteristics, Board Structure, Banking Institutions, Historical Literature Review, Financial Crisis, Bank Risk, CEO, Corporate Social Responsibility, CSR, Bank Efficiency, Board Governance, Board Size, Board Independence, Gender Diversity, Blau Index, Risk-adjusted Bank Performance, Tobin's Q, Return-on-Risk-Adjusted-Capital, Sharpe Ratio, Sortino Ratio, Board Diversity, Bank Risk, Bank Performance, Cost Efficiency, Bank Stability, Cultural Openness, Women Directors, Foreign Directors, Directors Educational Level, Islamic Banks, Board Diversity, Gender Diversity, Gender Quota, Emerging Economy, Bank Outcomes, Attendance, Board Effectiveness, Private Banks, Public Sector Banks, India, Corporate Social Responsibility, ESG, Sustainable Finance, Responsible Investing, Socially Responsible Banks, Risk Management, Stakeholder Engagement, Financial Stability, Sustainability, Firm Value, Climate Finance, Policy Uncertainty, Financial Stability, Climate Risk, Bibliometric Analysis, Financial Markets, Financial Assets, Asset Pricing, Capital Flows, Sustainability, Accruals, Earnings Management, Accounting Value, National Culture , Cultural Dimensions , Collective Intelligence , Secrecy, Intelligence Quotient, International Accounting, Covid-19, Pandemic, Impact, Risk, GCC Banks, GCC Islamic Banks, Conventional Banks, Profitability, Capitalization, Resilience, Asset-based Indicators, Bank, China, Density, Diversification, FinTech, Focus, Income-Based Indicators, Kernel, Quantile Regression, Big Data, Economic Capital, Emerging Markets, FinTech, GARCH-M (1; 1), GCC Financial Markets, Liquidity Risk, Reinforcement Machine Learning, Risk Management, Portfolio Management, Liquidity-Adjusted Value at Risk, Risk Metrics, Risk Spillover Effects, Internet Finance, GARCH Models, VaR Models, CoVaR Models, Securities Firms, COVID-19, Systemic Risks, China, Regulatory Reporting, Systemic Risk, Financial Stability, SupTech, RegTech, Financial Reporting, Algorithmic Data Standards, Blockchain, Financial Crisis, BCBS 239, Banks, Gulf Cooperation Council (GCC), Political Connections, Trade-Off Theory, Pecking Order Theory, Capital Structure, Risk, Profitability, Speed Of Adjustment, Generalized Method of Moments (GMM), Flash Crash, High Frequency Traders, Regulatory Framework, Algorithms, Algorithmic Trading (AT), Financial Market, Capital Market, (search for similar items in EconPapers)
JEL-codes: G21 G3 G34 (search for similar items in EconPapers)
Date: 2024
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