Board Gender Diversity and Environmental Credit Risk in Banking: A Global Study of Bank Governance

This study investigates the relationship between board gender diversity and environmental credit risk in the global banking sector. Using a panel dataset of 345 publicly listed banks from 75 countries over the period 2018–2022, we find that greater female representation on bank boards is significantly associated with lower environmental credit risk. Moreover, we provide evidence of a critical mass effect, showing that the risk-mitigating influence of gender diversity becomes statistically significant only when boards include at least three female directors. These findings support gender socialization, diversity, and stakeholder theories, suggesting that gender-diverse boards are better equipped to oversee environmental risks and enhance banks’ resilience to environmentally driven credit vulnerabilities. The results remain robust across alternative model specifications, instrumental variable estimation, and propensity score matching, reinforcing the causal interpretation of the findings. The study carries implications for corporate governance, financial regulation, and sustainable finance practices, highlighting the importance of moving beyond token representation toward substantive female participation in bank boards.