Gender Diversity or Tokenism? Examining the Impact of Female Executive Leadership on Working Capital Management in Banking Sector of Pakistan
DOI:
https://doi.org/10.2478/rsep-2026-0010Keywords:
Gender Diversity, Tokenism, Female Executive Leadership, Working Capital Management, Corporate GovernanceAbstract
This paper will investigate whether the female executive leadership in the banking sector of Pakistan reflects substantive influence on the financial decision-making process or merely symbolic representation. Although the rising trend of gender diversity has led to a rise in the number of female representations in the corporate world, there is limited evidence as to whether the increased female representation has led to a comparable increase in the financial performance of the company, especially in the context of the emerging markets. This paper explores the connection between female executive leadership and working capital management, and major financial performance indicators such as liquidity and profitability, drawing on the theory of corporate governance and tokenism.
The analysis is based on a dynamic Generalised Method of Moments (GMM) to overcome possible issues of endogeneity using panel data of 18 commercial banks list in Pakistan stock exchange over a period of 10 years. The results demonstrate a positive, albeit a weak, correlation between female executive leadership and working capital management, indicating that there is some effect on short-term financial discipline. Nevertheless, there is no statistically significant relationship between female leadership and more general performance indicators like return on assets and return on equity. These findings give subtle information on how gender diversity plays in the emergent markets.
Although female executives seem to affect operational financial decisions, their overall effects are minimal, in line with aspects of tokenism. The research study adds to the existing literature by going beyond the representation-based studies and analysing the functional implications of gender diversity in financial decision-making. It also provides empirical evidence regarding a little explored context, emphasising the significance of institutional and organisational circumstances in defining the effectiveness of leadership diversity.
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