Credit growth and asset quality in banks: examining the role of gendered leadership and board gender diversity

Abstract

Purpose The study examined the role female presence in leadership and on boards plays in the nexus between loan growth (i.e. credit growth) and bank asset quality in Ghana. Design/methodology/approach Data were obtained from the audited annual reports of 23 universal banks operating in Ghana for the period 2000–2022. Generalized method of moments (GMM) was applied in the generation of empirical results. Findings The results provide evidence that although credit/loan growth can lead to a deterioration in the loan portfolio of banks, the presence of women in corporate leadership and their presence on boards can ensure bank asset quality (lower loan loss provision) in the presence of credit growth or excessive lending. Practical implications The key implication of the findings is that, as part of measures by banks to reduce the incidence of loan defaults for the purpose of ensuring higher bank asset quality, banks can pursue and invest in policies that improve the presence of women in leadership and on boards. Originality/value The study empirically demonstrates for the first time from an emerging country context, Ghana, that the undesirable outcome (i.e. loan portfolio deterioration) that may emerge from credit growth (i.e. excessive lending) can be addressed by having women in bank leadership and on boards, as their presence ensures lower loan loss provisions.