ABSTRACT

This study investigates the effect of gender diversity on the financial soundness (FS) of banks. More specifically, study aims to assess that how the presence of women in the boardroom effect the bank’s financial soundness. We also investigate the percentage of women (greater representation of women) impact the FS of Islamic banks (IBs) and conventional banks (CBs) of Pakistan. We employed data from several sources, such as bank-level data obtained from financial statements and annual reports over the period of 2010 to 2022. Selection of banks is on the basis of full-fledged IBs and CBs. Moreover, study uses panel techniques of Hausman tests, random effects models for the empirical analysis. Empirical results for the model suggest that having women as a board of director (BOD) does represent a valuable resource for CBs. Our results imply that IBs face possible explanation of the negative association between women presence and FS of IBs is that the social role theory and the importance of social norms and religious values in either discouraging or upholding gender stereotypes, to the debate by studying women board participation in IBs on religious doctrine. Moreover, in case of CBs presence of women can positively enhance the FS of the CBs, it also enhances creativity, innovation, and productivity. Our findings provide supporting evidence for recruiting women to serve on boards in the banking industry.