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Governance and performance of MFIs: the Cameroon case

Author

Listed:
  • Léopold Djoutsa Wamba

    (University of Dschang)

  • Isidore Bimeme Bengono

    (University of Dschang)

  • Jean-Michel Sahut

    (IDRAC Business School
    HES-SO, University of Applied Sciences Western Switzerland)

  • Frédéric Teulon

    (IPAG Business School Paris)

Abstract

The main challenge of microfinance institutions and social economy firms remains their survival, and to meet this challenge, MFIs need to be competitive. The poor performance of MFIs is usually attributed to their decision-making and operational processes. The governance of MFIs is therefore identified as one of their main risks. Despite this, governance is still little explored in these organizations and empirical studies find a weak relationship between classical governance mechanisms and MFI performance, especially for the MFIs situated in Africa (Thrikawala et al. in Asian J Financ Account 5(1):160–182, 2013a). In this study, we examine whether the effect of governance mechanisms on the performance of MFIs differs according to their legal status in the Cameroonian context. On the one hand, our empirical results show that there is a significant relationship between some specific governance mechanisms and MFIs’ performance. On the other hand, adjusting the governance mechanisms according to the MFIs’ legal status improves their efficiency. The analysis of the impact of the governance mechanisms on the performance of MFIs requires not only an approach that is specific to this sector but also an approach that is adapted to their legal status. Moreover, from a managerial point of view, it would be desirable to adjust the governance mechanisms, depending on the legal status of the MFIs, to make them more efficient from the social as well as the financial standpoint.

Suggested Citation

  • Léopold Djoutsa Wamba & Isidore Bimeme Bengono & Jean-Michel Sahut & Frédéric Teulon, 2018. "Governance and performance of MFIs: the Cameroon case," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 22(1), pages 7-30, March.
    • Handle: RePEc:kap:jmgtgv:v:22:y:2018:i:1:d:10.1007_s10997-017-9381-9
    DOI: 10.1007/s10997-017-9381-9
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    Cited by:

    1. Md. Ali Rasel & Sandar Win, 2020. "Microfinance governance: a systematic review and future research directions," Journal of Economic Studies, Emerald Group Publishing Limited, vol. 47(7), pages 1811-1847, April.

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