Role of Women in Indonesian Banking Governance and Its Impact on Financial Metrics and Risk

Abstract

Over time, the representation of women on boards of directors has gradually increased, although significant gaps still remain. The representation of women on bank boards varies significantly by region. Women are often more thorough in their decision-making analyses compared to men, which can enhance the quality of problem assessment and the development of alternative solutions. This study aims to analyse the impact of female board directors, female executives, and female audit committees on company performance and risk-taking within the banking sector. The research is conducted on 47 banking companies listed in Indonesia over the 2018–2022 period, yielding 235 firm-year observations. Panel data regression is employed to examine the relationship between gender representation in governance roles and firm performance, measured by return on equity (ROE) and return on assets (ROA), as well as risk-taking behaviour. The empirical results show that the presence of women on boards, in executive roles, and on audit committees has no statistically significant effect on either firm performance or risk-taking. Furthermore, control variables such as loan levels, board size, and capital also exhibit no significant influence. These findings suggest that internal company dynamics and structural factors may have a greater influence on performance outcomes than gender diversity alone. The study is limited to the banking sector in Indonesia, which may affect the generalizability of the results. Future research could explore other sectors or include qualitative assessments to further understand the role of gender in corporate governance. The findings imply that increasing gender diversity in corporate leadership alone may not be sufficient to enhance firm performance or mitigate risk. Organisations and regulators may need to consider complementary strategies that address deeper structural and operational factors. This paper provides empirical evidence from an emerging market context on the role of women in corporate governance, contributing to ongoing discussions about gender diversity and its real impact on firm outcomes. The study offers value to academics, policymakers, and practitioners interested in inclusive governance and performance management.