Board gender diversity, risk-taking behaviour and profitability of Ghanaian banking sector a moderating role of bank ownership

Abstract

This study investigates the effect of board gender diversity and risk-taking behavior on the performance of Ghanaian-resident universal banks with a moderating role of bank ownership type. The study is guided by specific objectives to (i) assess the effect of board gender diversity in bank performance (ii) ascertain the effect of risk-taking behaviors on bank performance and (iii) assess the moderating role of bank ownership in the risk taking behaviour-bank performance relationship. A 12-year secondary data was obtained from 15 Ghanaian-resident universal banks. Having employed a quantitative research approach with Arellano-Bond Generalized Method of Moment (GMM) estimation technique, the results indicate that board gender diversity has positive effect on bank profitability whereas risk-taking behaviour negatively impacts bank profitability. The result further evinces that bank ownership significantly moderates the risk-taking behaviour-bank profitability nexus. The study concludes that high female representation on board is essential for bank success. The study also concludes that banks with higher risk appetite tend to incur huge losses. Conclusion was also made that bank ownership is essential in shaping the risk behaviours of banks in Ghana. The study recommends that financial institutions should try and diversified their board to include more females as it helps to increase profitability. Local banks should proactively seek opportunities for knowledge sharing and collaboration with foreign-owned banks. Additionally, policymakers should consider reviewing regulations to encourage collaboration and information exchange between foreign-owned and local banks, aiming to enhance operational efficiency and sector stability. Banks should also implement robust risk assessment processes, stringent credit policies, and investment strategies that prioritize stability over excessive risk. The central bank should increase their focus on enhancing and enforcing risk management regulations for bank.