Diversity and risk taking in Islamic banks: Does public listing matter?

This study examines two dimensions of diversity on the board of directors (BOD) and the sharia supervisory board (SSB), namely, gender diversity and educational diversity, and their influence on risk taking by Islamic banks. The study extends the literature by examining whether the influence of gender and educational diversity on Islamic banks' risk taking differs based on whether the bank is publicly listed. Based on a sample of Islamic banks in twenty-six countries, the findings suggest that greater representation of women on the BOD decreases the insolvency risk at listed Islamic banks and that the educational diversity of BOD and SSB members has a significant influence on Islamic banks’ risk taking, conditional on whether they are publicly listed. The results are robust to market-based risk measures and the use of a difference–generalized method of moments estimator and propensity score matching technique.