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Governance and performance of microfinance institutions in Mediterranean countries

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  • Ben Soltane Bassem

Abstract

This paper examines empirically the relation between governance mechanisms and the performance of Euro‐Mediterranean microfinance institutions (MFIs) in terms of outreach and sustainability. Specifically, we found that performance‐based compensation of managers is not associated with better performance of MFIs. The results identify trade‐offs between MFIs outreach and sustainability depending on larger board size, and on higher proportion of unaffiliated directors. Moreover, the study shows that the more women there are on the board the better the performance, and reveals that external governance mechanisms help MFIs to achieve better financial performance. This study also allows us to distinguish other factors leading to better sustainability such as Regulation, and the use of individual lending methodology. However, the MFIs, active as NGOs, seem to be more consistent with their social mission than with their financial performance.

Suggested Citation

  • Ben Soltane Bassem, 2008. "Governance and performance of microfinance institutions in Mediterranean countries," Journal of Business Economics and Management, Taylor & Francis Journals, vol. 10(1), pages 31-43, September.
    • Handle: RePEc:taf:jbemgt:v:10:y:2008:i:1:p:31-43
    DOI: 10.3846/1611-1699.2009.10.31-43
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    1. Brigit Helms, 2006. "Access for All : Building Inclusive Financial Systems," World Bank Publications - Books, The World Bank Group, number 6973, December.
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    Cited by:

    1. Koen Rossel-Cambier, 2011. "Is Combined Microfinance an Instrument to enhance Sustainable Pro-Poor Public Policy Outcomes?," Working Papers CEB 11-013, ULB -- Universite Libre de Bruxelles.
    2. ZOUARI, Zeineb & NABI, Mahmoud Sami, 2013. "Enhancing the Enforceability of Islamic Microfinance Contracts in OIC countries," MPRA Paper 49816, University Library of Munich, Germany.
    3. Aruna Balammal & R. Madhumathi & M.P. Ganesh, 2016. "Pentagon Performance Model of Indian MFIs," Paradigm, , vol. 20(1), pages 1-13, June.
    4. Ben Soltane BASSEM, 2011. "Governance Quality and MFIS Repayment Performance," Review of Economic and Business Studies, Alexandru Ioan Cuza University, Faculty of Economics and Business Administration, issue 8, pages 159-168, December.

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