Do Females Perform Better During Crises? An Analysis of Bank Performance After Bailouts

ABSTRACT This paper investigates the impact of gender diversity on the performance of the US banks after the government's bailouts in 2008–2009 by using bank holding companies (BHCs) data for the period from 2003 to 2014. Based on critical mass theory, the study provides comprehensive empirical evidence that the relationship between board gender diversity and bank performance is contingent on a specific level of gender diversity on the board. Specifically, the optimal number of women that positively affects performance is under the tilted groups, which is between 20% and 40% of the board members. This is the first study that explores the impact of different levels of gender diversity of US banks on their performance. Our results are robust to endogeneity concerns (Lewbel‐IV and GMM) and several different specifications. The findings of this study provide important implications for various stakeholders, including policymakers, bank executives, and investors in the areas of corporate governance and diversity initiatives.