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AbstractThis paper investigates the effects on riskiness and performance of gender diversity in Italian bank boards. Italy deserves special attention because European comparisons for the 2000s show that it was among the European Union countries where women were least represented in bank boardrooms, and this gap remains even in a quota law regime. Our main econometric results suggest that gender diversity may have a positive impact on the credit portfolio riskiness and on profitability. Both results may be driven by women's higher risk aversion and their higher propensity to monitor activities, suggesting that women are "gold dust" for Italian banks. These findings, obtained by using a unique data set over the period 1995–2010 and by taking into account possible sources of endogeneity, support the effectiveness on bank performance of greater female presence on boards. Moreover, our econometric set‐up could offer a benchmark for further analysis on gender diversity effects for many countries, where a gender quota law is still not in place.

Using a dataset that combines bank organizational variables, information on firms' credit demand and balance sheet indicators, we investigate the impact of lending organization on credit dynamics during the 2008–2009 crisis period. Our main findings suggest that the variables shaping the organization of a bank in its lending to non‐financial firms have a complex impact on its ability to expand credit. Banks that made substantial use of credit scoring techniques actually reduced their credit expansion during the economic downturn. At the same time, banks that delegated more power to their branch managers were likely to expand loans at a higher rate. Finally, contrary to the evidence from the pre‐crisis period, we find that longer branch manager tenure in the same branch is detrimental to the credit growth rate. These findings are robust to a wide set of robustness checks.

A vast literature has emphasised that small banks are at a comparative advantage in lending to small businesses. In this paper, we show that, in addition to bank size, loan officers' authority affects banks' specialisation in small business lending. By using a unique dataset based on a survey of Italian banks, we find that loan officers' authority has a key role in explaining bank specialisation in small business lending. In particular, banks that delegate more decision‐making power to their loan officers are more willing to lend to small firms than other banks. We use several proxies for measuring loan officers' authority: their discretion in loan approval and in setting loan interest rates, the amount of money up to which they are allowed to lend autonomously, their turnover, their compensation schemes and the kind of information (soft vs. hard information) used both for screening and monitoring purposes.