Assessing the Impact of Gender Diversity on ESG Performance in European Banks: A Generalized Estimating Equations Approach With Goodness‐of‐Fit Insights

Abstract

This study investigates the impact of gender diversity in governance—specifically the presence of women on boards and in top management—on both financial and ESG (Environmental, Social, and Governance) performance in the European banking sector. While prior literature has largely focused on non‐financial firms, our research addresses this gap by examining listed banks across Europe over a four‐year period (2019–2022). Using a generalized estimating equations (GEE) framework suitable for longitudinal data, we provide robust empirical evidence of a positive relationship between gender diversity and sustainable performance outcomes. We introduce, within the GEE context, coefficients of determination based on three statistics: Wald, adjusted likelihood ratio (LR) test and adjusted Lagrange multiplier (LM). In particular, we suggest LR based on the Wald statistic with the GEE robust covariance matrix, and we replace the Wald statistic with the GEE robust covariance matrix in the LM statistic. Our findings suggest that gender‐diverse leadership teams not only enhance financial performance but also strengthen ESG engagement, underlining the strategic relevance of inclusive governance in the banking industry. The study offers important managerial and policy implications, particularly in support of regulatory efforts aimed at increasing female representation in financial leadership.