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Performance and corporate governance in microfinance institutions

  • Mersland, Roy
  • Strøm, Reidar Øystein

We trace the relationship between firm performance and corporate governance in microfinance institutions (MFI) utilising a self constructed global data set on MFIs, collected from third-party rating agencies. We study the effect of board characteristics, ownership type, competition and regulation on the MFI's outreach to poor clients and its financial performance. The results show that split roles of CEO and chairman, a female CEO, and competition are important explanations. Larger board size decreases the average loan size while individual guaranteed loan increases it. No difference between nonprofit organisations and shareholder firms in financial performance and outreach is found.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 3887.

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Date of creation: Jun 2007
Date of revision:
Handle: RePEc:pra:mprapa:3887
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  1. Hermalin, B.E. & Weisbech, M.S., 1991. "The Effects of Board Composition and Direct Incentives on Firm Performance," Papers 91-02, Rochester, Business - Financial Research and Policy Studies.
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  7. Oxelheim, Lars & Randøy, Trond, 2001. "The Impact of Foreign Board Membership on Firm Value," Working Paper Series 567, Research Institute of Industrial Economics.
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  21. Hartarska, Valentina, 2005. "Governance and performance of microfinance institutions in Central and Eastern Europe and the Newly Independent States," World Development, Elsevier, vol. 33(10), pages 1627-1643, October.
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  27. Mark Schreiner, 2001. "Aspects of Outreach: A Framework for the Discussion of the Social Benefits of Microfinance," Development and Comp Systems 0109003, EconWPA.
  28. Crespi, Rafel & Garcia-Cestona, Miguel A. & Salas, Vicente, 2004. "Governance mechanisms in Spanish banks. Does ownership matter?," Journal of Banking & Finance, Elsevier, vol. 28(10), pages 2311-2330, October.
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