Board Independence and Microfinance Performance: Evidence from an Emerging Market

22 Pages Posted: 28 Nov 2018

See all articles by Dr. Mohammad Delwar Hussain

Dr. Mohammad Delwar Hussain

Green University of Bangladesh - School of Business

Iftekhar Ahmed

Universiti Utara Malaysia

Date Written: November 5, 2018

Abstract

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

Delwar Hussain, Dr. Mohammad and Ahmed, Iftekhar, Board Independence and Microfinance Performance: Evidence from an Emerging Market (November 5, 2018). Available at SSRN: https://ssrn.com/abstract=3278463 or http://dx.doi.org/10.2139/ssrn.3278463

Dr. Mohammad Delwar Hussain

Green University of Bangladesh - School of Business ( email )

220/D, Begum Rokeya Sarani
West Kafrul, Dhaka 1207
Bangladesh

Iftekhar Ahmed (Contact Author)

Universiti Utara Malaysia ( email )

School of Economics, Finance and Banking
College of Business
Sintok, Kedah 06010
Malaysia

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