The impact of board gender diversity on capital structure: Evidence from the Ethiopian banking sector

This study examined the influence of gender diversity on capital structure decisions among Ethiopian banks from 2010 to 2022. Clarifying the relationships between board composition and strategic financing choices carries academic and practical significance. Research questions focused on whether representation impacts leverage levels and the consistency of effects across contexts. The study aimed to address gaps in understanding governance’s implications in developing markets like Ethiopia. Annual reports of 15 established banks provided data on leverage, gender diversity percentages, board size and other governance traits, profitability metrics, and bank-specific characteristics. Panel data techniques, including GMM regression, addressed endogeneity concerns. Key findings found gender diversity consistently correlated with lower debt utilization, aligning with notions of improved monitoring. However, board size revealed nuanced relationships dependent on strategic considerations. The larger bank scale did not definitively elevate borrowing as predicted, indicating contextual contingencies warrant examination. Profitability is positively associated with leverage, as anticipated based on theoretical underpinnings. The research provides initial insights yet highlights avenues for deeper contextualized analyses. Continued learning promises to further our understanding of diversity’s strategic implications and empower balanced policies that leverage inclusion’s advantages.