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Board gender diversity and default risk in a bank-based financial system: A pre-registered study

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  • Sakawa, Hideaki
  • Watanabel, Naoki
  • Ali, Searat

Abstract

This pre-registered study examines the empirical analyses to reveal how close bank-firm relationships and women on boards (WOB) affect default risk in the bank-based (financial) system, which is approved in the pre-registered report (Sakawa et al., 2024). Using Japan's Corporate Governance (CG) code as an exogenous shock to affect gender diversity on the board, we also implement the Difference-in-Difference (DiD) approach and sub-sample analyses in the pre-CG and post-CG (code) period. Our study documents three key results: 1) the main banks perform effective monitoring to mitigate default risk for their client firms. 2) The monitoring role of WOB does not affect default risk in the full sample; however, we find some support for the effective role of WOB in mitigating default risk in the post-CG period. 3) The monitoring role of the main bank is a substitute for WOB in mitigating default risk. These findings answer a big research question: “Who are the effective monitors of mitigating default risk?”. Overall, our results show that the main bank is more effective in monitoring than WOB in the bank-based system.

Suggested Citation

  • Sakawa, Hideaki & Watanabel, Naoki & Ali, Searat, 2026. "Board gender diversity and default risk in a bank-based financial system: A pre-registered study," Pacific-Basin Finance Journal, Elsevier, vol. 96(C).
    • Handle: RePEc:eee:pacfin:v:96:y:2026:i:c:s0927538x25003440
    DOI: 10.1016/j.pacfin.2025.103007
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