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CONTEMPORARY ISSUES IN ECONOMY & TECHNOLOGY

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Management and supervisory board gender diversity as an indicator of financial institutions’ profitability in Croatia

The role of women on the labour market is quite significant in terms of economic growth and sustainable development. However, women are still underrepresented in leading positions in companies. This particularly refers to boardroom positions in financial institutions, such as banks and insurance companies, which are traditionally held by men. Given the above, the paper aims to investigate whether board gender diversity was an important driver of banks' and insurance companies' performance in 2014. Board composition variables used in our model include: share of women on supervisory boards (%), share of women on management boards (%), female members on supervisory board dummy variable, female members on management board dummy variable as well as supervisory and management board Blau index. Accounting measures, namely return on assets and return on equity, were used as company profitability variables. In order to investigate the true relationship between board gender diversity and bank/insurance company profitability, authors employed various empirical research methods, namely; correlation, t-test and ordinary least squares (OLS) regression method. The main finding is that there is a statistically positive relationship between the share of women on management boards and the business performance of financial institutions. Moreover, financial institutions with at least one female management board member performed better in terms of both return on assets and return on equity.

Author(s):

Marina Lolić Čipčić    
Sveučilište u Splitu, Odjel za stručne studije
Croatia

Tomislava Pavić    
Sveučilište u Splitu, Odjel za stručne studije
Croatia

 

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