Gender Diversity on Boards and Bank Efficiency Across Emerging Europe

This paper aims to contribute to the intense policy debate on gender diversity by providing new insights regarding the link between gender diversity across boards and efficiency in emerging banking markets. We employ an original dataset specific to a large sample of financial institutions from Central and Eastern Europe (CEE) and find robust evidence that the absence of females on supervisory and managing boards results in lower cost efficiency (minimum production cost with limited resources), as well as lower technical efficiency (maximum output production with limited resources). In turn, greater gender diversity among the members of the bank boards increases efficiency, especially for smaller banks. Our results also indicate that encouraging females’ presence in supervisory boards that have more domestic or less independent members leads to higher bank efficiency. When banks have less restrictive governance mechanisms, greater gender diversity across managing boards also enhances bank efficiency.