Sci.Int.(Lahore),28(1),721-728 ,2016 ISSN 1013-5316; CODEN: SINTE 8 721 BEYOND WFC: UPLIFTING THE DEBATE TO XX-INEFFICIENCY WITH REFERENCE TO BANKING SECTOR OF PAKISTAN Muhammad Farooq Anwar1,.Bilal Mehmood2,.Shrafat Ali Sair, 1,2Department of Economics, G.C University, Lahore, Pakistan [email protected], [email protected] [email protected] School of Business Administration, National College of Business Administration and Economics, Lahore, Pakistan. (Presented at the 5th International. Multidisciplinary Conference, 29-31 Oct., at, ICBS, Lahore ABSTRACT: This study examines the female under performance hypothesis (FUPH) and hence XX-inefficiency reasons in banking sector of Pakistan. A sample, of 25 commercial banks, is taken which are operating in Pakistan. Data span extends to five years from 2009 to 2013. Non-parametric technique, Data Envelopment Analysis (DEA) is used to measure technical efficiencies and total factor productivity.The performances of these banks are compared according to female labor’ contribution. A negative correlation is found between average total factor productivity and average female density. Tobit regression is also applied to provide parametric support to non-parametric evidence. Regression results supported the trade off between female labor density and average factor productivity in a statistically significant way. Recommendations include re-thinking hiring policies regarding female labor in the banking industry for better productivity and higher profits. Key Words: Female Underperformance Hypothesis, XX-inefficiency, Data Envelopment Analysis, Tobit Regression. 1. INTRODUCTION incentives for female labor, while other purports their under- Leibenstein popularized the idea of X-inefficiency in productivity. It is a growing sector and has less number of economic theory. However, in genetics, XX stands for female females as compared to other industries. The reason can be gene and in economics,female underperformance hypothesis the working environment of banks. No doubt that bank job is (FPUH) purports lower performance of female labor as considered a white collar job but bankers have to face many compared to male labor.Accordingly, XX-inefficiency is a issues like late sittings, target pressure, over work burden, term used to explain the reasons for FUPH. The compilation low salaries [9] and shortage of staff etc. all these factors of these reasons is done in [17]. make this job quite stressful and hectic. In developing Banking industry in Pakistan is growing day by day. Females countries like Pakistan, females have many constraints and are not considered to be a good performer in banks as bank limitations. Now the question arises can females really cope job is considered to be very hectic and stressful [9]. Most of with these difficulties to perform at their best? In the presence the banks avoid having females as their employees, which of these obstacles can females really manage to contribute in results in huge difference in number of male labor in banks productivity of banks in Pakistan? Are they really efficient in than the female labor as compared to other industries. This banking sector of Pakistan? These entire questions prompted research seeks the impact of female bankers, on the the researcher to conduct this research. performance of the banks in Pakistan. Gender studies are the It has been observed that some organizations, particularly theme of study in the different domain of the education and banks do not prefer to have females as their employees. For professions. Banking sector industry is a vital actor in the example,Bank Al Habib and Meezan Bank till recent past. economics of Pakistan. They discourage female workforce as it is considered that On the basis of this assumption of thefemale banking is a stressful and time consuming and hectic job [9]. underperformance hypothesis, banks feel reluctant to hire So females cannot endure this burden to compete with males females. Many banks like Bank Al Habib are found to have a in terms of performance. On the basis of this perception very biased culture for female labor. This may be the reason employers feel reluctance in hiring female labor. [22] and that only a few females can be seen on the top management [29] worked to prove this myth of female underperformance of any bank in Pakistan. It is clear that if you hire fewer wrong. They called this female underperformance hypothesis females and demotivate them then how it is possible for them a myth and proved that males and females have no difference to reach at top levels. First Women Bank Ltd. is the only in terms of performance. As per their perception a female bank in Pakistan which is concentrated with female labor. It labor can perform as good as a male labor then gender has a large number of females working there. It is the only discrimination in top management is not judicious. The study bank in Pakistan which has females in its top management as of female performance is of importance as this well. This thing introduced the term of “Glass ceiling” which underperformance can even influence the policy of the will be discussed in later on. organizations. In past different studies on female performance have been The objective of this paper is to investigate the presence of conducted. Many researches like [26,22,29] argued in the FUPH in banking industry of Pakistan. favor of female labor and on the other hand researcher like 2. LITERATURE REVIEW [13,8,27] argued against the female labor. This is a never FUPH is new in economic literature therefore not much of ending debate, but on the same side it is very important to studies exist on this issue. [8] worked on the performances of identify their performance as it can impact the policies & Swedish female and male entrepreneurs. For this purpose, rules of any organization [29]. they selected the sample size of 4200 entrepreneurs from all There are two schools of thought as per female productivity is the sectors of economy with 405 females. In an extensive concerned. One advocates equal productivity and hence equal multivariate regression with a large number of controls it Jan.-Feb 722 ISSN 1013-5316; CODEN: SINTE 8 Sci.Int.(Lahore),28(1),721-728 ,2016 showed that female entrepreneurs tend to underperform positive effect on firm‟s performance as compared to those relative to men at several points. Furthermore, they analyzed females who are in top management but have lesser degree. that female underperformance is much lesser in large firms Some [6] examined the gender diversity in the boardroom and it does not exist in firms which have only one employee. and financial performance of commercial banks. They took Others [25] performed a gender based analysis of micro and evidence from Bangladesh‟s banking sector. The sample was small enterprises in Indonesia. They took a sample of 200 of 15 listed commercial banks. Data was taken from the entrepreneurs which included 112 women entrepreneurs. The annual reports from 2002 to 2005. After calculating ROA and performance of these enterprises was examined with the help ROE of the sample banks for the said period, they used of employment and profit. The end results found by this Kruskal Wallis H-test to measure the association between research proved that the variables which affected the women gender diversity in board of directors and the financial controlled business in Java were, total number of family performance of the banks. The result showed a contradictory labor, demographic factors like age of the entrepreneur and relationship between gender diversity and financial age of enterprise and industry sector. These factors, which performance. Furthermore, they mentioned that due to certain affected the performance of women were different from the limitation like lack of data availability and small sample size, factors that were previously found in different studies. the findings were interpreted very carefully. In future, with Others in [27] worked on female leadership. He analyzed different variables and larger sample size, the research with whether female CEO works better than the male CEO. He the similar topic can be done more efficiently. took a sample of the total 58 companies in America who are In [4], the authors examined the female participation in top having female CEOs. The data was taken from 1985 to 2004 management and in firms‟ performance. They took data of i.e. twenty years. He performed two-sided student‟s t-test for 1500 USfirms from 1992 to 2006. They used Tobin‟s Q test mean of return differentials and Wilcoxon test for the median to measure firm‟s performance. For better understanding, of return differentials between the stock prices of companies they divided the sample into two sections. In first section, in female and male companies‟ samples. The results of both they measured the performance of firms in which there are student‟s t-test and Wilcoxon test showed that the females in senior management but below the CEO Level. In performance of stock of companies which have female CEOs the second section, performance was measured of those firms are under performed as compared to the stock of those which have female CEOs. The result proved that the firms companies which have male CEOs. The performance of male which have females in senior management have a positive headed companies was 20% greater than those who have effect on firm‟s performance, whereas in second section female CEOs. where firms have female CEOs, have a neutral or negative Collins et. al. [3], analyzed the role of gender in financial effect on firm‟s performance. performance. In order to prove their hypothesis, they took a Some worked on whether gender matters for the firm‟s sample size of 160 sole proprietors. The controlled variables performance or does not in Eastern Europe and Central Asia were practice characteristics, motivations and individual [23].