Performance and Corporate Governance in Microfinance Institutions

Mersland, Roy; Strøm, R. Øystein

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Performance and Corporate Governance in Microfinance Institutions

Journal of Banking and Finance, Vol. 33, No. 4, pp. 662-669

37 Pages Posted: 24 Jun 2007 Last revised: 21 Dec 2010

See all articles by Roy Mersland

We trace the relationship between firm performance and corporate governance in microfinance institutions (MFI) utilising a self constructed global data set on MFIs, collected from third-party rating agencies. We study the effect of board characteristics, ownership type, competition and regulation on the MFI's outreach to poor clients and its financial performance. The results show that split roles of CEO and chairman, a female CEO, and competition are important explanations. Larger board size decreases the average loan size while individual guaranteed loan increases it. No difference between nonprofit organisations and shareholder firms in financial performance and outreach is found.

Keywords: Microfinance, performance, corporate governance, ownership, boards, global study

Suggested Citation: Suggested Citation

Mersland, Roy and Strøm, Reidar Øystein, Performance and Corporate Governance in Microfinance Institutions. Journal of Banking and Finance, Vol. 33, No. 4, pp. 662-669, Available at SSRN: https://ssrn.com/abstract=996283