Gender Diversity or Tokenism? Examining the Impact of Female Executive Leadership on Working Capital Management in Banking Sector of Pakistan

This paper investigates whether the female executive leadership in the banking sector of Pakistan reflects substantive influence on the financial decision-making process or merely symbolic representation. Although the growing trend of gender diversity has increased female representations in the corporate world, there is limited evidence as to whether the increased female representation has led to a comparable increase in the financial performance of the company, especially in the context of the emerging markets. This paper explores the connection between female executive leadership and working capital management, and major financial performance indicators such as liquidity and profitability, drawing on the theory of corporate governance and tokenism. The analysis employs a dynamic Generalised Method of Moments (GMM) approach to overcome possible issues of endogeneity, using panel data of 18 commercial banks listed in Pakistan Stock Exchange over a period 2016–2025. The findings demonstrate a positive, albeit a weak, correlation between female executive leadership and working capital management, Suggesting some influence on short-term financial discipline. However, no statistically significant relationship is found between female leadership and broader performance measures such as return on assets and return on equity. These findings Provide nuanced insides how gender diversity plays in the emergent markets. Although female executives appear to influence operational financial decisions, their overall Impact remains limited, reflecting certain aspects of tokenism. The study contributes to the existing literature by going beyond the representation-based studies and analysing the functional implications of gender diversity in financial decision-making. It also provides empirical evidence from a relatively unexplored context, highlighting the importance of institutional and organisational conditions in shaping the effectiveness of leadership diversity and offering insights for policymakers and banking regulators seeking to promote meaningful gender inclusion in corporate leadership.