Board Independence and Microfinance Performance: Evidence from an Emerging Market
22 Pages Posted: 28 Nov 2018
Date Written: November 5, 2018
The study aims to examine the relationship between board independence and the performance of microfinance institutions (MFIs) in Bangladesh. This study makes use of a panel dataset involving 80 MFIs for the period 2005-2015. Applying panel data estimation, this study reveals that CEO duality enhances the outreach of MFIs, but does not improve institutional sustainability. Conversely, the findings indicate that the board size and the number of independent directors in the board significantly harm the outreach however facilitate MFIs to be financially sustainable. The results partially support the proposition of stewardship theory and stakeholder theory; however, it rejects the propositions of agency theory.
Keywords: Board Independence, Board of Directors, Emerging Market, Governance, Microfinance
JEL Classification: G21, G30, G34
Suggested Citation: Suggested Citation