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June 2016

Braving the Financial Crisis: An Empirical Analysis of the Effect of Female Board Directors on Bank Holding Company Performance (WP 2016-1)

This publication is part of:

Collection: Economics Working Papers Archive


We examine whether the number of women serving on boards of directors of U.S. bank holding companies (BHC) affected financial performance during the financial crisis of 2008–2012. In so doing, we specifically address a sizeable gap in the academic literature on the effect of female board directors on bank performance. Our research is unique because an emerging body of research indicates that the number of female directors positively influences nonfinancial firm performance; however, until now there has been little research on the effect of female directors on the financial performance of BHCs.

Another unique contribution of our research is our dataset, which consists of demographic data on BHC boards of directors that we constructed using publicly available definitive proxy statements filed by the largest BHCs from 1994–2014. Using our dataset, we explore the link between critical mass theory and BHC financial performance during this 21-year span and, in particular, during the financial crisis. We conclude that during the financial crisis, controlling for financial and board governance characteristics, BHCs with at least three female directors braved the crisis better, significantly outperforming BHCs with fewer female directors, as measured by Tobin's Q. This conclusion contrasts with the results over the full 21-year span. Over the longer time period, we conclude that both the performance of BHCs with at least three female directors was not statistically different than that of BHCs with fewer female directors and BHCs with at least two female directors on average showed significantly lower performance.


Laura St. Claire, Lauren Silber, Rebecca Royer, John Wong, and Charlotte Anne Bond