Mediation role of human capital on gender diversity and credit risk: Evidence of Indonesian rural banks


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This study uses human capital that shows the intangible asset’s core in reducing the risk or improving firm performance to solve previous inconsistent results of women’s role in firm performance. Thus, this paper examines the role of human capital as the mediator in the influence of gender diversity on credit risk in a rural bank. This examination involves 433 rural banks based on the purposive sampling method. The result reveals that higher gender diversity has higher human capital (α = 0.135, ρ = 0.005) and higher human capital has lower credit risk (α = –0.205, ρ = 0.000). It also revealed that when gender diversity is controlled by human capital as a mediator on credit risk, gender diversity does not affect credit risk (α = –0.022, ρ = 0.625). However, human capital still affects credit risk (α = –0.205, ρ = 0.000). It implies that the higher a woman on the board of directors, the lower the credit risk through her education competence. Women as organization leaders have high self-appreciation from organization members in implementing their strategies and supervising them. High credit risk in rural banks needs appropriate management as a part of an internal governance mechanism. This study contributes to gender diversity literature through the ability to manage risk in measuring women’s role as strategic agents. This study also contributes to investor protection through the reputation of women on boards as monitoring agents.

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    • Table 1. Performance of Indonesian rural banks, 2012–2019
    • Table 2. Descriptive statistic
    • Table 3. Hypothesis testing results
    • Conceptualization
      Nung Harjanto, Rahmawati Rahmawati, Yavida Nurim
    • Data curation
      Nung Harjanto, Djuminah Djuminah
    • Formal Analysis
      Nung Harjanto, Rahmawati Rahmawati, Muthmainah Muthmainah, Yavida Nurim
    • Funding acquisition
      Nung Harjanto, Rahmawati Rahmawati
    • Investigation
      Nung Harjanto, Djuminah Djuminah, Muthmainah Muthmainah, Yavida Nurim
    • Methodology
      Nung Harjanto, Rahmawati Rahmawati, Djuminah Djuminah, Muthmainah Muthmainah, Yavida Nurim
    • Project administration
      Nung Harjanto, Yavida Nurim
    • Resources
      Nung Harjanto, Rahmawati Rahmawati
    • Software
      Nung Harjanto, Djuminah Djuminah
    • Writing – original draft
      Nung Harjanto, Yavida Nurim
    • Writing – review & editing
      Nung Harjanto, Rahmawati Rahmawati, Djuminah Djuminah, Muthmainah Muthmainah
    • Supervision
      Rahmawati Rahmawati, Djuminah Djuminah, Muthmainah Muthmainah
    • Validation
      Rahmawati Rahmawati, Djuminah Djuminah, Muthmainah Muthmainah
    • Visualization
      Muthmainah Muthmainah