Women Representation on Boards of Directors of Commercial Banks in Bangladesh

In recent years, the financial press, academic research custom parking signs australia, and regulatory attention have been paid substantially to the diversification in senior leadership, especially on the board of directors that gives shareholders the maximum benefits of a firm’s corporate governance. In the corporate world, gender is at the forefront of diversification. The issue of gender diversity on corporate boards has received considerable attention during the last two decades in many countries, including the United States, Canada, United Kingdom, France, New Zealand, Australia, Spain, Jordan, Denmark, Iceland, and Norway (Sealy, Vinnicombe, & Singh, 2008; Elstad & Ladegard, 2012; Deloitte Global Centre for Corporate Governance, 2019). Also, in corporate governance research, gender issues have been a growing interest (Huse, Nielson, & Hagen, 2009; Terjesen, Sealy, & Singh, 2009; Collier, 2008; Brennan & Solomon, 2008; Brennan, 2006; Sealy & Singh, 2006; Farrell & Hersch, 2005). The core functions of a board are to appoint the CEO and other managers, monitor and control management functions, monitor compliance with firm policies and laws, provide the network with the external environment, and provide information and counsel (Larcker & Tayan, 2015). Researchers have found that the women directors on boards have a critical influence on the board’s processes and effectiveness and, consequently, on firm performance (e.g., Kesner, 1988; Daily, Certo, & Dalton, 1999; Farrell & Hersch, 2005; Nielsen & Huse, 2010; Oliveira & Félix, 2020). A considerable amount of research, more specifically, documented the benefits of women’s representation on corporate boards, including financial and organizational performance (Herring, 2009; Oliveira & Félix, 2020), broader network in diverse markets and client groups (Sinha, Chaudhry, & Mah, 2013), innovation and creativity in problem-solving (Slater et al., 2008) and product and service development (Niebuhr, 2010), and retention of the most highly skilled workforce (Sinha et al., 2013) in the organizations. Governments in many countries emphasized gender diversity to improve corporate governance following the financial crisis in 2008. In Europe and North America, almost all countries have established minimum quotas for female representation on boards in publicly traded companies (Mateos de Cabo et al., 2012; Deloitte Global Centre for Corporate Governance, 2019). Thus, the number of women on corporate boards has significantly increased in different countries and regions, addressing the gender diversity in top management. According to Deloitte Global Centre for Corporate Governance (2019), the percentage of board seats held by women worldwide was 12% in 2014, 15% in 2016, and 16.9% in 2018. Despite this, many regulators, investors, and campaigners feel that focusing on gender diversity is insufficient. They have expanded their advocacy to encompass other forms of diversity (Deloitte Global Centre for Corporate Governance, 2019). A growing body of research has explored gender diversity and corporate governance, although it has focused on single countries and cross-industry analysis, excluding the specific sector. As a result, we know very little about the women’s representation and structure of the board in the major industries, i.e., financial services, manufacturing, health care, technology, media, and telecommunications.

This study extends the extent of the financial and single-country-centered discussions to consider the specific industry/sector: the banking sector. Banking corporate governance requires a separate analysis for two specific financial institution-related characteristics (De Andres & Vallelado, 2008). First, banking operations are more complex than non-financial companies (Furfine, 2001). Second, the existence of public safety against the bank’s failure generates moral hazards because banks are induced to take on more risks in the expectation of using safety net policies in the event of trouble (Demirgüç-Kunt & Kane, 2002; Kahn & Santos, 2005; Santos, 2001; Sbracia & Zaghini, 2003). For the second feature of banks, corporate governance has become more important to mitigate their potential systematic risks (European Central Bank, 2005).

Despite the wide range of research on women’s participation in corporate boards, very little has been written based on data gathered about women on boards in the banking sector in Bangladesh. This study endeavors to fill this gap by focusing on women’s careers and roles as perceived by themselves (Terjesen et al., 2009). Therefore, this study intends to find out the answers to the following research questions:

RQ1: What is the current status of women’s representation on the board of directors of commercial banks in Bangladesh?

RQ2: How can commercial banks implement the best practices of gender di- versity on the boards?

The study focuses on Bangladeshi commercial banks to examine gender differences in the board and the board’s role. In contrast to the earlier studies, which have mainly concentrated on women’s careers, the present study considers both female and male board members. This paper, therefore, has two significant contributions. Firstly, it provides empirical evidence of women’s representation on corporate boards in the Bangladeshi banking sector. Secondly, the present study aims to enhance the theory and knowledge of gender differences and the roles of women in top business positions.