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Board diversity and performance of microfinance institutions

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Abstract

Microfinance Institutions (MFIs) are important service providers of finance for unbanked people and have experienced a high growth over the past decades. Alongside the staggering growth of microfinance around the world, there have been some serious complaints of unfair practices and low transparency in their affairs. Therefore, it is questionable whether microfinance contributes to a true reduction in worldwide poverty in the short or long terms. This study examines the corporate governance practices of microfinance institutions (MFIs) in India and their relationship with both financial performance and outreach for the period 2007 to 2012. Using unbalanced panel data for 575 firm-year observations, we report that the financial performance and outreach of Indian MFIs improves when they have international/donor representation on their board. Independent directors and client representatives on board perform favourably on financial performance but no impact on outreach. However, female directors on the board increases outreach to the poor people but decrease the financial performance. This study significantly contribute to a better understanding of board diversity of microfinance sector by providing empirical evidence from one of the dominant countries in South Asian region.

Item Type: Paper presented at a conference, workshop or other event, and published in the proceedings
Uncontrolled Keywords: Microfinance, MFIs, business
Subjects: H Social Sciences > HF Commerce
Divisions: Schools > Centre for Business, Information Technology and Enterprise > School of Business and Adminstration
Depositing User: Adrian France
Date Deposited: 17 Dec 2018 20:07
Last Modified: 21 Jul 2023 07:59
URI: http://researcharchive.wintec.ac.nz/id/eprint/6560

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