Board gender diversity, corporate governance and bank efficiency in Ghana: a two stage data envelope analysis (DEA) approach

Abstract

PurposeThis study aims to analyze the efficiency of banks under board gender diversity and to examine the determinants of bank efficiency.Design/methodology/approachData for analysis were sourced from annual reports of 21 banks for the period from 2009 to 2017. A two-step framework was used: first, an examination of efficiency scores with and without board gender diversity computed using data envelopment analysis; and second, a regression of board gender diversity as a determinant of bank efficiency using panel estimation on an unbalanced panel data.FindingsThe results reveal that gender diversity promotes bank efficiency up to a maximum of two female directors on a nine-member board of directors, suggesting a threshold effect on bank efficiency. Board size improves bank efficiency. Board independence is negatively related to bank efficiency. Also, powerful chief executive officers are detrimental for bank efficiency. Finally, the authors find that ownership structure, bank size, bank age and loan-to-deposit ratio are important factors affecting bank efficiency.Research limitations/implicationsAll bank-year observations with no female representation on the board were excluded. As such, this paper is limited to 21 banks. Future research should look at a larger data set and account for dynamic endogeneity.Practical implicationsThe paper contributes to bank governance structure, namely, gender composition of boards, and provides an insight for regulators and shareholders to estimate the role of men and women on boards.Originality/valueThe novel feature of the efficiency model used is that it incorporates board gender diversity as an additional input variable, in line with the preposition of proponent of resource dependency theory.