Challenging the Norm: The Paradox of Gender Diversity and CSR in Banking – An Empirical Study on Performance Impact

M.Leyla Rosita¹*, Muazaroh²

Abstract

This study analyses the effect of gender diversity in the board of directors on company performance with Corporate Social Responsibility (CSR) as a mediating variable. Gender diversity is measured by the Blau index, company performance by return on assets (ROA), and CSR by the Global Reporting Initiative (GRI) Standard index, which includes economic, environmental, and social categories. Using a quantitative approach, data were collected from banking companies listed on the Indonesia Stock Exchange (IDX) during 2020-2023. Multiple regression and path analysis were employed to test direct and indirect relationships between gender diversity, CSR, and company performance. The findings reveal that gender diversity in the board of directors has a negative impact on firm performance and CSR does not mediate the impact of gender diversity on firm performance in banking sector. The implication is that bank management should carefully manage gender diversity in their boards, as poor management may reduce company performance. Although gender diversity is often considered essential, this study suggests that in the banking sector, differing perspectives, values, and communication styles arising from board gender diversity may lead to conflicts that hinder swift and accurate decision-making. Moreover, CSR is more likely to show financial benefits over the long term, requiring strategic investments. For policymakers, these findings highlight the need to craft diversity and CSR policies tailored to sector-specific contexts and company characteristics to achieve optimal outcomes.