The impact of executive board gender diversity on risk-taking in Canadian and US banks

There is extensive evidence that Canadian banks withstood the 2008 Financial Crisis better than their peers in North America, owing to strong regulatory oversight, a concentrated industrial structure, and conservative banking practices. Following the failure of Lehman Brothers in 2008, however, the Head of the International Monetary Fund (IMF) suggested that increasing the number of women on executive boards of financial institutions could reduce overall risk-taking behaviour in the financial sector. Our analysis shows that the ratio of female to male board members rose steadily over the sample period, but that this increase was often accompanied by a surge in risk-taking behaviour in both countries, particularly in investment banking. Our research contributes to a growing literature showing that risk-aversion may characterise average women, but not necessarily those who choose to pursue a career in male-dominated and risky industries and reach leadership positions therein.