Board Gender Diversity and Risk-Taking Behavior of Islamic Bank. A Conceptual Framework

Female directorships become significant contributors to corporate decision-making by targeting 30% of women on the board requirement under the Malaysian Code of Corporate Governance 2017 (MCCG 2017). Gender diversity in board composite attracts attention in corporate governance studies, while vast literature documented that female director have more substantial positive implications on firm performance. In nature, females behave risk-aversion psychologically and are relatively more conservative than men while making decisions. Hence, board gender diversity and firm risk-taking behavior are gaining much interest in academic and industry players to the extent of sustainable socio-economic development. However, there is still not much investigation conducted on the role of female directors in Islamic banks with the stereotype of woman’s lack of opportunities to compete with men in a top high-ranking position, particularly in the Islamic banking environment. This study proposed a conceptual framework to examine the composite of female directors in Islamic banks in Malaysia, with the new targeting proportion of women directorship under MCCG 2017, and the relationship of bank risk-taking behavior. Moreover, this paper also makes an attempt to propose other bank governance and bank-specific characteristics as control variables for analyzing the association between female director and bank risk-taking behavior.