Gendered language and board diversity: Evidence from European banks

Abstract

Based on a sample of EU banks covering the period 2007 to 2021, I explore the impact of gendered language on bank board diversity policies. I find that gendered language negatively affects banks' gender diversity practices, especially after the passage of board reforms. Further, I find that rule of law and government efficiency explain the relationship, suggesting that these are useful mechanisms to reduce the negative effect of language gender-marking orientation on banks' gender diversity practices. However, results do not show a statistically significant effect of board gender diversity on riskiness of banks operating in countries with higher language gender orientation. My study provides a timely contribution to the literature by filling the gap regarding the importance of language gender-marking orientation in explaining banks' diversity practices and suggesting that regulators and institutions should take stronger actions aimed at reducing such cross-country heterogeneity. It also provides useful insights for EU regulators following the passage of the mandatory “Women on Boards” Directive in 2022.