Corporate Governance and Firm Performance: Evidence from Microfinance Institutions in Ghana

The study investigates the connection between Ghanaian microfinance institutions’ (MFIs’) performance and corporate governance practices using exploratory and descriptive statistics from eight (8) MFIs across Ghana. The study’s findings suggest a strong positive connection among the selected corporate governance mechanisms, namely ownership structure, independence of the audit committee, board diligence, independence of directors, financial expertise of directors, and performance. The study’s findings show that ownership structure followed by the financial expertise of directors is among the preferred corporate governance techniques that most significantly affect MFI performance in Ghana. Generally, the outcome of this study supports the idea that although corporate governance positively affects the performance of MFIs, the extent of that performance is stifled by challenges like a lack of transparency and a lack of independence of the audit unit. In light of this, the study recommends that MFIs take a keen interest in resolving such related challenges. Again, to strengthen the independence of audit units within MFIs, regulatory authorities should mandate the establishment of independent audit committees that will ensure objectivity and autonomy in the auditing process. Further, stringent financial reporting standards for MFIs, that aligns with international best practices should be enforced by regulatory authorities.The study’s conclusions have implications for MFI shareholders, managers, investors, and regulators in terms of policy.