




































American International Journal of Business and Management Studies  

Vol. 2, No. 1; 2020 

ISSN 2641-4937   E-ISSN 2641-4953 

Published by American Center of Science and Education, USA 

 

44 

 

Role of Women Director on Productivity Performance: A Study on 

Listed Private Commercial Banks of Bangladesh 
 

 

Naznin Sultana Chaity 

Assistant Professor 

School of Business 

Ahsanullah University of Science and Technology 

141-142 Love Road, Tejgaon Industrial Area, Dhaka 1208, Bangladesh 

E-mail: nschaity@gmail.com 

 

Parul Akhter 

Associate Professor 

School of Business 

Ahsanullah University of Science and Technology 

141-142 Love Road, Tejgaon Industrial Area, Dhaka 1208, Bangladesh 

E-mail: paru25.1980@gmail.com 

 

Rifat Parveen Bokhari 

Assistant Professor 

School of Business 

Ahsanullah University of Science and Technology 

141-142 Love Road, Tejgaon Industrial Area, Dhaka 1208, Bangladesh 

E-mail: rifat.bokhari.sob@aust.edu 

 

 

Abstract 

Efficiency measurement and productivity performance analysis now become a point of interest for many 

researchers'. Because it is established that efficient and productive banks could ensure superior performance by 

achieving the objective of wealth maximization. Board of Directors issues have also become an integral part of 

corporate governance studies. This study is conducted to know the bank efficiency and productivity change for the 

representation of women directors on board. This study examines the productivity and efficiency performance of 

twenty-two (22) listed private commercial banks in Bangladesh based on the Malmquist Productivity Index (Total 

Factor Productivity) over the period of 2007 to 2016. A low degree of relationship found between women directors 

representation in a board and productivity performance. But, there are significant differences found in productivity 

performance among the different generation banks. 
 

 

Keywords: Women Director, Productivity Changes, Malmquist Productivity Index, Total Factor Productivity, Bank 

Performance.  

 

1. Introduction 

Efficiency and productivity analysis is considered as a central point to measure the business performance because it 

includes the productive process, business profitability, and market value of the companies (Sheu & Yang, 2005; 

Sufian, 2011; Sufian &  Kamarudin, 2014). Bank efficiency is considered to be an important factor for economic 

growth in a country. It is established that efficient and productive banks could generate superior performance by 

achieving the objective of profit maximization through wealth maximization (Jahan, 2019).  

Efficiency and Productivity change can be measured by two approaches – one is an econometric estimation 

of cost, production and the other one is a construction of index using of non-parametric approach (Guarda & 

Rouabah, 2009). The non-parametric approach is most popular among the researcher in the application of measuring 

the efficiency of financial institutions, i.e. banks. The bank is a multiproduct company with multiple inputs and 

outputs. Malmquist Productivity Index (MPI) is a kind of productivity analysis (based on non-parametric data 

envelopment analysis techniques) shows both the changes in technological and efficiency from one time period to 

mailto:paru25.1980@gmail.com


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another period (Clarke, Cull, D’Amato, & Molinari, 2000; Bhattacharya, Lovell, & Sahay, 1997; Isik & Hassan, 

2002; Kirikal, 2005).  

This study is motivated to know bank efficiency and productivity change concerning the board of directors 

(BODs). It is believed that board composition as a central aspect of corporate governance mechanism by academic 

researchers, investors, and policymakers. They believe that board members have a direct influence on determining 

firm value (Claessens & Yurtoglub, 2013). Although it is said that management is responsible for operating 

efficiency, revenue efficiency, and cost efficiency, BODs set objectives, monitor performance, ensure equitable 

distribution of resources and made management accountable to every action (Uribe‐Bohorquez, Martínez‐Ferrero, & 

García‐Sánchez, 2019) 

Studies on board aspects of gender diversity are also given equal importance now a day. Women director in 

a board provides evidence of higher productivity and superior performance of an organization (Depren & Depren, 

2016). Thus, Norway and Spain have made mandatory to have at least 40% women for all listed companies and 

Malaysia has imposed to have 30% women director in a board (Von Bergen, Soper, & Parnell, 2005; Mohamed, 

Clayton, & Isa, 2015). It has been assumed that women are better at maintaining ethical standards strictly and 

strongly assume their responsibilities. Women are also more sensitive to all the perspectives and needs of 

stakeholders (Post & Byron, 2015; Campbell & Mínguez‐Vera, 2008; Erhardt, Werbel, & Shrader, 2003). It is also a 

belief that women on the board will ensure more gender equality (Campbell & Mínguez‐Vera, 2008). 

Lee, Lan, and Rowley (2014) said that women directors could assist companies in retaining and developing 

relationships with investors, customers, and different stakeholders which leads to improving the performance of the 

company. Based on these perspectives, this study is conducted to know the performance of the banking industry of 

Bangladesh based on gender diversity (the presence of women in board structure). Some studies found relating the 

board performance with efficiency estimation (Erhardt, Werbel, & Shrader, 2003; Campbell & Minguez-Vera, 2008; 

Mahadeio, Soobaroyen, & Hanuman, 2012; Post & Byron, 2015; Uribe‐Bohorquez, Martínez‐Ferrero, & 

García‐Sánchez, 2019) All those studies are mostly conducted in developed countries and cross-country 

perspectives.  

This paper contributes to the existing literature by showing the effect of representation of female directors 

in a board and bank performance in case of the developing counties like Bangladesh. The rest of the paper is 

structured in the following ways. Section two is the literature review and the subsequent section describes the 

methodology, data and variable measurement issues, and findings and analysis. 

 

2. Literature Review and Hypothesis Development 

Corporate governance aspects ensure the accountability of management by an effective monitoring system, building 

investor confidence, reducing agency costs, and improving organizational efficiency (Organization for Economic 

Co-operation and Development, 2015). There are number of studies conducted on showing the positive impact of 

corporate governance mechanism on corporate performance (Mohan & Chandramohan, 2018; Yilmaz & Buyuklu, 

2016; Alam & Akhter, 2016; Zelenyuk & Zheka, 2006). The concept of gender-diverse board entails the perspective 

of age, gender, ethnicity, religion, professional background, skill, and technical know-how, experience, and values 

(Van der Walt & Ingley, 2003). 

Several kinds of literature are found on productivity analysis in the banking industry. One of the most 

recent studies found in Kalluci (2018). This study uses the MPI technique in the Albanian banking industry from 

2006 to 2017. The study found that efficiency had improved in medium-size banks than the large and small banks. 

Depren and Depren (2016) studied the efficiency and total factor productivity of the Turkish banking sector using 

DEA and MPI techniques for the years 2014 and 2015. Based on the production approach and intermediate 

approach, they found that overall performance is increased in terms of production approach but opposite found 

under the intermediate approach. 
 

Varesi (2015) measured the Albanian banking sector productivity using of Malmquist DEA method. The 

results showed that medium and small size banks were more productive than large banks. Marković, Knežević, 

Brown, and Dmitrović (2015) studied the productivity changes in Bank of Serbia using DEA and MPI. Studying 

from the period of 2007 to 2010, they claim that productivity in the banking sector was decreased. Kao and Liu 

(2014) also studied on banking industry using the MPI method to measure the performance of the Taiwanese 

banking industry from 2005 to 2010. The results showed that the performance of the commercial bank has 

improved.
 

Sufianand and Habibullah (2014) studied on impact of globalization on bank's productivity in the 

Malaysian banking sector over the period of 1998 to 2007 using of MPI method. It was found that personal contacts, 

political globalization, and information flow have a significant impact on the bank’s total factor productivity. 

Evaluated on total factor productivity and the impact of market development on bank efficiency in China over the 

https://onlinelibrary.wiley.com/doi/10.1002/csr.1659#csr1659-bib-0062
https://onlinelibrary.wiley.com/doi/10.1002/csr.1659#csr1659-bib-0012
https://onlinelibrary.wiley.com/doi/10.1002/csr.1659#csr1659-bib-0012
https://onlinelibrary.wiley.com/doi/10.1002/csr.1659#csr1659-bib-0080


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period of 1999 to 2008. Their study found that the productivity growth of Chinese banks can be attributed to 

improvement in technical efficiency and technical change. 
 

Sufian (2011) studied on Malaysian banking industry over the period of 1995 to 2004 based on the MPI 

method. The study found that the banking sector exhibit decline in productivity due to technological efficiency. 

Angelidis and Lyroudi (2006) used the MPI on Italian banks and found that the total factor productivity has 

increased during that period. Isik and Hassan (2002) examined the financial reforms in the banking industry of 

Turkey using MPI for the period 1981 to 1990. The study opined that there were efficiency changes rather than 

technological advancement. Chu-Fen (2004) studied productivity changes in Germany over the period of 1992 to 

2000. They found that the foreign banks were more productive because of improvement in technology and 

efficiency. 

In Bangladesh, researches related to efficiency and productivity analysis for the financial industry are found 

but in a limited number. Jahan (2019) studied the productivity of private commercial banks is conducted over the 

period of 2011 to 2015 using MPI techniques. A comparative study is conducted between Islamic banks and 

conventional banks and found that Islamic banks showed less variability in the index than the conventional banks. 

Baten, Kasim, and Rahman (2015) studied nationalized commercial banks (NCBs) and private commercial banks 

(PCBs) based on cost DEA, profit DEA, and MPI based on DEA method. Their study found that PCBs are efficient 

from the NCBs in terms of cost and profit.   

In Bangladesh, the literacy rates for females are much lower than they are in developed countries, and 

positions of female directors are simply an ornamental post. Hence, it is likely that views and opinions held by a 

female director are given less attention (Ahmed & Liza, 2013). This raises the question of whether female in the 

board is only a sign of symbolic effort or raises the productivity performance of any firm. Studies of the presence of 

the female director and bank performance are hard to find in the case of Bangladesh. Based on this research gap, this 

study is conducted to know about the impact of women in board and productivity changes in private commercial 

banks (PCBs) of Bangladesh. Following hypotheses have been made based on the research gap – 

 

 H 1:  There is a change in the productivity performance of private commercial banks having women directors in 

their board structure. 

 H 2: There is a gap in productivity performance among different generations of private commercial banks in 

Bangladesh. 

 

3. Research Methodology 

The Malmquist productivity index (MPI) was first developed by Malmquist in 1953 by Stan Malmquist and further 

it was developed by Fare, Grosskopf, Lindren, and Roos (1994); Tatjé and Lovell (1995); Bjurek (1996); Färe, 

Grosskopf, and Russell (1998); Thrall (2000); Kirer (2013).  Malmquist index measures the efficiency change over 

time. The MPI is another format of Data Envelopment Analysis (DEA). The DEA is defined as the method used for 

efficiency analysis of a complex business unit with multiple inputs and outputs (Yang, 2009). The MPI is calculated 

under the assumption of constant return to scale (CRS) with output orientation. The input or output orientation is the 

same for the MPI method (Coelli, 1996; Thanassoulis, 2001). 

MPI methods have several advantages and mostly used in the case of financial industries. The index is used 

to identify productivity change of entity with multiple inputs and outputs. It does not need input/output prices 

(Krikal, 2005). Total factor productivity (TFP) change is another name uses for MPI. It is the outcome of the 

multiplication of two ratios of technical efficiency and technological change. Technical Efficiency change can be 

decomposing into two components - scale efficiency change and pure technical efficiency change.  All the 

components are calculated based on the geometrical average of MPI (Fare, Grosskopf, Lindren, and Roos (1994).  

The output-oriented CRS based MPI following the Fare, Grosskopf, Norris, and Roos (1994) is as follows-  

 

M0 measures the productivity from two different periods. 'x' stands for inputs and 'y' stands for output. The 

index uses technology for the 't' period and the next period 't+1'. To quantify the productivity change, MPI uses the 

distance function of a variable. Further, this index is decomposed into two components- Technical Change and 

Technical Efficiency Change. 
 

 

(1) 

 

(2) 

 



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In the above equation, the first ratio measures the technical efficiency (Catch-up effect –‘C’) as of Farrell 

and Hersch (2005) for the period t to t+1. The second ratio (inside the bracket) is the geometric average of two ratios 

used to measure the change in technology – technical change (Frontier –shift effect – ‘F’). 

 
Productivity is increased if MPI > 1. It can be said that technical efficiency improvement (C > 1) and 

technical progress occurred (F > 1). Productivity is decreased if MPI < 1 when technical efficiency decreases (C < 1) 

and technical progress has not occurred (F < 1). 3. Productivity is stable if MPI = 1. It can be said that both technical 

efficiency and technical progress remain for the time being (Depren & Depren, 2016; Thanassoulis, 2001). DEAP 

2.1 is the computer program used to measure the MPI using DEA methods developed by Coelli (1996). 

 

4. Data Collection, Variable Selection, and Measurement Issues 

In the case of Bangladesh, a large data set is not readily available. It is very difficult to collect data because of 

market imperfection and a restrictive legal environment. In this respect, the Non-parametric method is appropriate 

techniques to estimate the best practice firms (Bhattacharya, Lovell, & Sahay, 1997). The population of this study is 

all the listed private commercial banks of Bangladesh on the Dhaka Stock Exchange (DSE). The study period for the 

sample is considered from the years 2007 to 2016. The reasons for the selection of the period are:
 

(a) Corporate governance guidelines came in a structured way since 2006. All the listed companies have to comply 

with those guidelines.
 

(b) In 2016, some major reforms were made in corporate governance guidelines subject to changes in the 

composition of BODs and different committees.
 

Among the thirty (30) private commercial banks, only twenty-two (22) is selected based conventional 

banking perspective and ten years of data availability. DEA based MPI technique requires the input and output 

variables to be specific. This specification for input variables and the output variable is crucial. For the present 

study, Constant Return to Scale (CRS) is assumed for measuring the efficiency. According to Grifell-Tatj`e and 

Lovell (1995), MPI does not provide an accurate measure of productivity change with the non-constant scale. The 

advantage of the CRS method is that the results are coincidental for the input and output-oriented approaches.
 

 

        Table 1. Input and Output variables for MPI Analysis 

 

Input Description 

Board Quality Percentage of women director to the total number of directors
 

Percentage of women independent director to the total number of directors
 

Percentage of women director in the Audit Committee
 

Cost of Fund Total interest expense to total deposit 

Capital Intensity Total assets to the total number of employees
 

Output  

Growth Percentage change in the book value of total assets 

Profitability ROA (net profit after tax to total assets)  

Tobin’s Q The total Market value of the firm/ Total Asset value of the firm
 

 

Corporate governance aspect - ‘board quality’ is considered for this study. Under the board quality - the 

percentage of women independent directors, the percentage of women directors in the audit committee, and the 

percentage of women directors are taken and all the values are equated to total members of the board of directors. 

For input prices/cost, two other variables, cost of fund (total interest expense/total deposit) and capital intensity 

(total asset/total number of employees), are considered.  Bank performances are measured here with three variables: 

growth (percentage changes in the book value of total assets), profitability (ROA) and Tobin's Q (Kumbhakar & 

Lozano-Vivaz, 2005; Casu, Girardone, & Molyneux, 2004; Wang & Kumbhakar, 2009; Robin, Salim, & Bolch, 

2017).  

 

5. Findings and Analysis 

The following Table 2 shows the descriptive summary of the inputs and outputs variables of two hundred and 

twenty (220) observations for the twenty-two (22) PCBs over 10 years from the Year 2007 to the Year 2016.  

 

 

 



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Table 2. Descriptive Statistics 

 

Variables Percentage 

of women 

Director 

Percentag

e of 

women 

INDP 

Director 

Percentage of 

Women Director 

in the Audit 

Committee
 

Cost of 

Fund 

Capital 

Intensit

y 

Growt

h 

ROA 

(%) 

Tobin’s Q 

Mean 10.77 1.16 4.92 0.73 61.84 20.54 1.58 3.28 

Std. Dev. 9.88 4.52 11.44 6.73 29.82 11.15 1.18 3.93 

Minimum 0.00 0.00 0.00 0.00 4.64 -5.87 0.21 0.01 

Maximum 44.44 28.57 60.00 72.88 139.78 56.18 10.08 30.72 

Source: Author’s calculation 

 

Considering the corporate governance variables, board quality is measured through the presence of women 

directors on the board. The percentage of women directors to the total number of BODs is about 10.77% and the 

percentage of women independent directors is only 1.16%. It is also found that there is no presence of women 

directors at all in the different bank whereas maximum women director is found about 44.44% in some cases. Three 

output variables are considered here–growth in book value of total assets (GROWTH), return on assets (ROA) and 

Tobin’s Q. On average, 20.54% growth is observed in the PCBs of Bangladesh over the study periods, whereas, 

ROA is found, on average, at 1.58%, with a standard deviation of 1.18. Tobin’s Q is found 3.28% with a standard 

deviation of 3.93. 

Cost of Fund (COF) is measured using total interest expense to the total deposit. It is found that COF is, on 

average, 73.39% for all the PCBs with a standard deviation of 6.73. It is normal to have a high COF because a 

majority of the banks' funds are collected from using different deposits accounts.  Most banks' expenditures occurred 

due to interest given on deposit accounts. Capital intensity (CI) is measured through the total assets to the total 

number of employees. All the PCBs are using, o average, and 61.84% of their assets per employee.  
 

Table 3 shows the total factor productivity change (TFPCH) along with its components efficiency change 

(EFFCH) and technological change (TECHCH), and two other subcomponents of efficiency change-pure technical 

efficiency change (PECH) and scale efficiency change (SECH). It has been found that the PCBs of Bangladesh do 

not experience much improvement from the Year 2007 to the Year 2016. The mean TFPCH/MPI is at found 1.0%. 

TECHCH/MPI is characterized by the development of new products or technologies which result in improvement 

and shift the production frontier upfront. Due to the stock market crisis, financial market development and banking 

crisis may not have the opportunity to develop new products and services to the PCBs. Rather, PCBs are more 

concerned with their survival.
 

Conversely, reverse results are experienced in the case of EFFCH. Most of the banks improved their 

efficiency using their existing offers and services. The lowest value in TECHCH was observed in 2009 and it may 

be attributed as the outcome of financial crises that took place at that particular time. The result of this study is 

similar to the findings of other studies in different countries (Kalluchi, 2018).  

 

                        Table 3. Malmquist Productivity Index Summary of Annual Means (Year wise) 

 

Year EFFCH/ 

Catch-up 

Effect 

TECHCH/ 

Frontier-

shift Effect 

PECH SECH TFPCH/MPI 

2007 1.087 0.961 1.011 1.075 1.045 

2008 1.097 0.931 1.035 1.06 1.022 

2009 0.892 1.532 0.0882 1.012 1.367 

2010 0.95 1.185 0.994 0.955 1.125 

2011 1.096 0.56 1.078 1.017 0.548 

2012 0.768 0.967 0.96 0.8 0.743 

2013 1.173 0.714 1.08 1.086 0.837 

2014 1.043 1.155 0.983 1.061 1.204 



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2015 0.932 1.242 0.868 1.074 1.157 

2016 1.118 0.859 1.144 0.978 0.96 

Mean 1.0156 1.0046 0.92412 1.0118 1.0008 

Std. Dev. 0.125643 0.29034 0.303263 0.086518 0.239816 

Minimum 0.768 0.5 0.0882 0.8 0.548 

Maximum 1.173 1.532 1.144 1.086 1.367 

                                                                          Source: Author’s calculation 

 

To analyze the relationship between female director and productivity performance of PCBs, rank 

correlation is conducted. Few studies are found employing Spearman's rank correlation to show the rank similarity 

among different parametric and non-parametric methods. Since all the methods are based on the same concept. This 

study uses the rank correlation to test hypothesis 1 – generalize the relationship between women on board and 

productivity performance. In Table 4, it has been found that there is a low degree of correlation found between 

women director on board and productivity performance of PCBs in Bangladesh. From the results, there is no 

relationship of consistency found among the PCBs rank in the case of Bangladesh likewise Mahbub (2016). The 

result from the rank correlation is shown in the following table –  

 

Table 4. Correlation between the percentage of women director and MPI
 

 

 

             Source: Author’s calculation 

 

In Bangladesh, PCBs are classified into generations in the following ways, though banking laws do not 

mention specific generations in practice (Ahmed & Liza, 2013). Table 5 shows the results of different generations of 

banks in Bangladesh.  

 

               Table 5. Generation-wise Productivity Performance Change of Private Commercial Banks 

 

Banking 

Generation 

1st Generation 2nd Generation 3rd Generation 

% of Total 

Women 

Director 

TFPCH/ 

MPI 

% of Total 

Women 

Director 

TFPCH/ 

MPI 

% of Total 

Women 

Director 

TFPCH/ 

MPI 

Mean 10.39% 0.88 8.72% 1.01 12.23% 1.02 

Std. Dev
 7.12% 0.07 8.38% 0.08 10.30% 0.32 

Minimum 1.48% 0.82 0.00% 0.88 1.50% 0.81 

Maximum 20.95% 1.02 22.55% 1.10 29.83% 1.93 

Source: Author’s calculation 

 

Based on these generations of banks, it has been found that from 1
st
 generation to 3

rd
 generation the 

percentage of women directors was increased from 10.39% to 12.23%. The ratio of female director to total director 

is found lower in the case of second-generation banks. The 2
nd

 generation banks are holding only 8.72% of women 

directors. The productivity performance of all three generation banks is not improved in that significant way. But, it 

Spearman's rho 

 Percentage  

of Women 

Director 

Malmquist 

Productivity 

Index 

Correlation 

Coefficient 
.176 

Sig. (2-tailed) .432 

N 22 



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is also found that with the increase of women director total productivity of the banks also increasing from 0.88 to 

1.02 from 1
st
 generation to 2

nd
 generation PCBs. 

 

       Table 6. Kruskal Wallis Test 

 

Test Statistics
 a,b


 

Chi-Square 6.090 

Asymp. Sig. 0.048 

a. Kruskal Wallis Test 

b. Grouping Variable: Banking Generation 

Source: Author’s calculation 

 

Kruskal - Wallis Test is conducted to know whether any relationship among the different generations of 

PCBs and productivity changes in Bangladesh (hypothesis 2). From Table 6, it is found that the Chi-Square test 

statistics of 6.090 with a significance level of 0.048 reject the null hypothesis. There is a gap in productivity 

performance among three generations of PCBs in Bangladesh. 

 

6. Conclusion 

There are some implications of women director in a board, particularly in case of control and monitoring activities 

of management by reducing the agency cost and creating the value by increasing the firm performance 

(Uribe‐Bohorquez, Martínez‐Ferrero, & García‐Sánchez, 2019. This study is conducted to examine the relationship 

between women director on board, efficiency, and productivity changes of private commercial banks in Bangladesh. 

A low degree of relationship found with the presence of women directors on board, bank efficiency, and 

productivity changes. The generation-wise banking system shows significant differences among different 

generations. Third generation banks are generating different results (superior performance and increased number of 

women directors on board) than the results of first-generation banks. The future direction of research could be 

extended by considering the impact of ownership structure, legal and social structure on productivity and efficiency 

analysis of the banking industry. 
 

 

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Appendix 

 

Banking Generation 

First-Generation: Banks established between Year 1982 to Year 1990. 

Second-Generation: Banks established between Year 1991 to Year 1998. 

Third-Generation: Banks established between Year 1999 to Year 2011. 

Fourth-Generation: Banks established after Year 2011. 

 

 

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