Effects of Board Gender Diversity on Non-Performing Loans: A Case of Tanzanian Banks

Abstract

This study examined how board gender diversity affects non-performing loans
(NPLs) in Tanzanian banks, with a focus on the influence of women’s
representation and participation on loan performance. Grounded in the Resource
Dependency Theory, which underscores the value of diverse perspectives in
organizational decision-making, the research addresses whether increased
female inclusion on boards enhances credit risk management. The study was
conducted in Dar es Salaam, Tanzania’s financial hub and employed a
descriptive design with a quantitative approach. Data were collected using
structured Likert-scale questionnaires administered to 101 respondents,
including board members, senior management, and credit officers from NMB,
CRDB, and NBC. Simple random sampling was used to ensure fair participant
selection, and the sample size was determined using the Yamane formula from a
population of 134. Data were analyzed using descriptive and regression
techniques. The results revealed that a higher proportion of women on boards
and overall gender diversity significantly reduced non-performing loans (NPLs),
while the presence of women in leadership positions alone did not show a
statistically significant effect. These findings indicate that inclusive board
composition strengthens governance, loan approval processes, and risk
management. The study concludes that gender diversity on boards plays a vital
role in enhancing financial performance and reducing loan defaults, and it
recommends policies to promote board-level gender inclusion, capacity-building
for female leaders, and continuous monitoring of gender impacts in banking
governance.