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Determinants of the governance quality of microfinance institutions

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  • Tchakoute Tchuigoua, Hubert

Abstract

The objective of this article is twofold: identify the primary board characteristics that drive the quality of MFI governance and link governance quality to microfinance institutions’ outreach performance. We measure governance quality with the governance rating score provided by Planet Rating, one of the agencies that specialize in the rating of microfinance institutions. The study focuses on an independently pooled cross-section sample of 178 MFIs rated by Planet Rating from 2001 to 2011. Findings obtained after controlling for selection bias suggest that board expertise, board activity, and ownership type are the main board characteristics that significantly determine the quality of MFI governance. Findings seem to be robust when we change the measurement of board size and ownership type. Moreover, MFIs with an effective governance system tend to serve large numbers of customers.

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  • Tchakoute Tchuigoua, Hubert, 2015. "Determinants of the governance quality of microfinance institutions," The Quarterly Review of Economics and Finance, Elsevier, vol. 58(C), pages 32-43.
    • Handle: RePEc:eee:quaeco:v:58:y:2015:i:c:p:32-43
    DOI: 10.1016/j.qref.2015.02.011
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    Cited by:

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    More about this item

    Keywords

    Ratings; Board of directors; Governance quality; Microfinance; Outreach;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • L31 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Nonprofit Institutions; NGOs; Social Entrepreneurship

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