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Outreach and profitability of microfinance institutions: the role of governance

Author

Listed:
  • Anthony Kyereboah-Coleman
  • Kofi A. Osei

Abstract

Purpose - This paper aims to examine how selected governance indicators impact on performance measures of outreach and profitability in microfinance institutions (MFIs). Design/methodology/approach - The paper adopts a quantitative approach based on both primary and secondary data from conveniently sampled 52 microfinance institutions. A panel data technique is employed as the key analytical framework. Findings - It is shown that governance plays a critical role in the performance of MFIs and that the independence of the board and a clear separation of the positions of a CEO and board chairperson have a positive correlation with both performance measures. Research limitations/implications - It would have been appropriate to have a larger number of MFIs for the study. This limitation however does not compromise on the validity of the conclusions based on the findings of the study. Practical implications - In the context of multi-dimensional and sometimes conflicting objectives facing MFIs, a clear balancing act of social objectives and institutional sustainability to ensure effective performance of MFIs is recommended. Originality/value - Studies on governance and its relationship with firm behaviour is limited especially in Sub-Saharan Africa. Its application in the microfinance sector with its peculiar characteristics is the added value of this paper.

Suggested Citation

  • Anthony Kyereboah-Coleman & Kofi A. Osei, 2008. "Outreach and profitability of microfinance institutions: the role of governance," Journal of Economic Studies, Emerald Group Publishing, vol. 35(3), pages 236-248, August.
  • Handle: RePEc:eme:jespps:v:35:y:2008:i:3:p:236-248
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    Citations

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    Cited by:

    1. Nawaz, Ahmad & Iqbal, Sana, 2015. "Financial Performance And Corporate Governance In Microfinance: Who Drives Who? An Evidence From Asia," MPRA Paper 65327, University Library of Munich, Germany.
    2. repec:eee:intfin:v:53:y:2018:i:c:p:307-319 is not listed on IDEAS
    3. Janda, Karel & Turbat, Batbayar, 2013. "Factors Influencing Portfolio Yield of Microfinance Institutions in Central Asia," MPRA Paper 49549, University Library of Munich, Germany.
    4. Janda, Karel & Turbat, Batbayar, 2013. "Econometric Analysis of Profitability of Microfinance Institutions in Selected Asian Countries," MPRA Paper 51430, University Library of Munich, Germany.
    5. Mauricio Moura & Maurício José Serpa Barros de Moura & Rodrigo De Losso da Silveira Bueno & Maurício Sérgio Nunes Muritiba & Patricia Morilha Muritiba & Sergio Luiz do Amaral Moretti, 2014. "Market value analysis of entrepreneurs? microcredit and personal loans," E3 Journal of Business Management and Economics., E3 Journals, vol. 5(5), pages 120-130.
    6. Nawaz, Ahmad & Iqbal, Sana, 2015. "Does Social Performance Drives Corporate Governance Mechanism in MFIs? An Issue of Endogeneity," MPRA Paper 65312, University Library of Munich, Germany.
    7. James R. Barth & Chen Lin & Clas Wihlborg (ed.), 2012. "Research Handbook on International Banking and Governance," Books, Edward Elgar Publishing, number 14045, April.
    8. Shubhashis Gangopadhyay & S.K. Shanthi, 2012. "Governance Issues in Indian Microfinance," Chapters,in: Research Handbook on International Banking and Governance, chapter 36 Edward Elgar Publishing.
    9. repec:eee:reveco:v:53:y:2018:i:c:p:88-97 is not listed on IDEAS
    10. Inoue, Takeshi & Hamori, Shigeyuki, 2011. "Financial permeation as a role of microfinance : has microfinance actually been helpful to the poor?," IDE Discussion Papers 299, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    11. 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.
    12. repec:ipn:esecon:v:12:y:2017:i:46:p:41-60 is not listed on IDEAS

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