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Does Female Management Influence Firm Performance? Evidence from Luxembourg Banks

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  • Reinert, Regina M.
  • Weigert, Florian
  • Winnefeld, Christoph H.

Abstract

This study examines the relationship between the proportion of women in top management positions of banks and the financial performance of these institutions. Using prudential data from supervisory reporting for all credit institutions in the Grand-Duchy of Luxembourg from 1999 to 2013, we find a positive association between female management representation and firm performance. The economic effect is substantial: A 10% increase of women in top management positions improves the bank's future return on equity by more than 3% p.a. Moreover, we show that this positive relationship is (i) almost twice as large during the global financial crisis than in stable market conditions and (ii) non-linear with the most successful banks having a female management share in the range between 20% and 40%.

Suggested Citation

  • Reinert, Regina M. & Weigert, Florian & Winnefeld, Christoph H., 2015. "Does Female Management Influence Firm Performance? Evidence from Luxembourg Banks," Working Papers on Finance 1501, University of St. Gallen, School of Finance.
  • Handle: RePEc:usg:sfwpfi:2015:01
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    More about this item

    Keywords

    Management Diversity; Female Management Representation; Bank Performance;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility

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