Political Connections and Banking Performance: The Moderating Effect of Gender Diversity
study investigates the effect of gender diversity on the impact of board
members' political connections on banking performance. Using panel data on 83
banks supervised by the European Central Bank (ECB) for the period 2013-2017,
our results suggest that when gender diversity is high, there is a U-shaped nonlinear
relationship between political connections and banking performance. Empirical
evidence also indicates that differentiating characteristics of women, such as
greater ethical concern and risk aversion, help mitigate the negative effects
of political connections on banking performance, safeguarding the institutions’
interests from the adverse effects of personal agendas. In addition, our
results also suggest that a minimum of 14% gender diversity can actually contribute
to a greater social justice and beneficial structural change. Overall, these general
conclusions seem fairly robust, being drawn from several versions of the
regression model adopted in the study, using different sets of control variates
and different gender diversity measures.
Political connections, Gender diversity, Bank performance, ECB, GMM.