What Explains Governance Structure in Non-Profit and For-Profit Microfinance Institutions?

25 Pages Posted: 16 Feb 2009

See all articles by Roy Mersland

Roy Mersland

University of Agder

R. Øystein Strøm

OsloMet - Oslo Metropolitan University

Date Written: February, 13 2009


This paper aims to explain the choice of board and CEO characteristics in microfinance institutions (MFI). Explanations are sought in substitution or complementarity between the characteristics, external governance variables, and financial performance and outreach performance to the poor. The data are from 290 MFIs in 61 countries, and the logit regressions methodology is employed. The board and CEO characteristics are board size, CEO-chairman duality, international directors, and female CEO. We find relationships among these variables, and also that the external governance variables ownership type (shareholder owned) and international initialization induce smaller board, less duality, more international directors, and fewer female CEOs. Except for the female CEO result we argue that these results are consistent. The consistency is repeated for outreach performance to poor individuals and small businesses. We believe the study may inform better performance studies in the future, and also to motivate better governance in MFIs.

Keywords: Micro-finance organization, governance, performance

JEL Classification: G30, G32, J23

Suggested Citation

Mersland, Roy and Strøm, Reidar Øystein, What Explains Governance Structure in Non-Profit and For-Profit Microfinance Institutions? (February, 13 2009). Available at SSRN: https://ssrn.com/abstract=1342427 or http://dx.doi.org/10.2139/ssrn.1342427

Roy Mersland

University of Agder ( email )

Serviceboks 422
N-4604 Kristiansand, VEST AGDER 4604

HOME PAGE: http://www.uia.no/microfinance

Reidar Øystein Strøm (Contact Author)

OsloMet - Oslo Metropolitan University ( email )

P.O. Box 4
Oslo, 0130
+47 97968500 (Phone)

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