BOARD GENDER QUOTAS AND RISK-TAKING IN ISLAMIC BANKS: CROSS-COUNTRY EVIDENCE FROM OIC MARKETS

Abstract

This research investigates the association of board gender quotas and risk taking in Islamic banks across OIC markets. While the literature is flourishing on gender diversity practiced at the board level, scant studies explore the consequences of this phenomenon in relation to financial decision making of Islamic banks considering their specificity and sensitivity based on religious and ethical considerations. This paper attempts to address this gap by examining the influence of board gender quotas on risk-taking, drawing from OIC members’ experience. We draw on a sample of 100 Islamic banks situated in 15 OIC countries during a decade (2010–2020), and use quantitative methods, including regression models, to empirically investigate whether the gender quota-forced boards affect risk-taking behavior. The results show that the gender diversify boards are less risk taking, especially in banks that have greater compliance of Sharia. This paper offers insights into the interaction of gender diversity and risk in Islamic finance, with policy implications for OIC-engaged countries seeking to implement gender quotas. These results provide a new perspective on the role of board composition, and may hold ramifications for policy-makers, investors and regulators concerned about offsetting risks while establishing good corporate governance practices in the Islamic banking industry.

Keywords: Board gender quotas, risk-taking, Islamic banks, OIC markets, corporate governance, gender diversity, Sharia compliance.