The Critical Mass Question, Women Directors and Performance of Banks in Sub Saharan Africa

Abstract

This study mainly evaluated the effect of Board composition on the performance of deposit money banks (DMBs) in Sub Saharan Africa (SSA) with special focus on the critical mass question. Specific objectives are determination of the effect of women directors and board composed of more non-executive directors on return on assets (ROA) and net interest margin (NIM) of the banks. Secondary data on six SSA countries and twelve banks collected for the period 2004 to 2016 were used. Panel data regression approach was employed with model selection subjected to Hausman tests. The study revealed among others that board with more nonexecutive directors has significant positive effect on ROA and NIM with significant positive relationship with ROA and NIM. Women directors have very negligible effect on performance of the DMBs while correlating negatively and insignificantly with ROA and NIM. It is therefore, concluded that though, nonexecutive directors have strong positive significant effect on performance of deposit money banks in Sub Saharan Africa and women directors indicate very negligible effect, the conflicts over the effect of the two variables are not yet fully resolved. It is recommended that DMBs should make room for at least three female directors in their boards while adoption and enforcement of gender quota by countries should be considered.