Brain drain in microfinance institutions: the role of gender and organizational factors

Abstract

Purpose Uncontrollable brain drain (employees’ turnover) has been found to hamper humanitarian and sustainable objectives of socially oriented organizations. Hence, this study aims to explore the roles of gender and organizational-level factors on the rate of employees’ turnover in microfinance institutions (MFIs). Design/methodology/approach The study used an unbalanced panel data of 235 MFIs spanning the period 2010–2019. Based on the availability of the required data set on the World Bank catalogue (in collaboration with Microfinance Information Exchange-MIX Market), this study covers four South Asian countries, namely, Bangladesh, India, Pakistan and Sri Lanka. Then, the authors analyzed the data using the conventional panel data regression techniques (e.g. fixed effects model and random effects model). Findings The regression results revealed that women leaders (board members) could significantly reduce the employee turnover rate of MFIs. Although the efficiency wage hypothesis is supported in this study, it depends on the profit orientation of the MFIs. This study also confirmed that financial sustainability and donations have helped MFIs to reduce their employees’ turnover, which reiterates the image and brand value effect of MFIs. Moreover, the overall gender development and legal status (e.g. Bank and Non-Bank Financial Institutions) have also been found to have an effect on employees’ turnover based on the sub-sample analysis. Originality/value To the best of the authors’ knowledge, the study is among the first to investigate the impact of gender and institutional characteristics on employees’ turnover based on a large and recent panel dataset from selected South Asian countries.

The impact of employee turnover on the financial performance of microfinance institutions: A global evidence

“…Nonetheless, differences in legal status also result in different types of agency problems that might distract the focus of microfinance objectives (Tchakoute‐Tchuigoua, 2010). For example, commercial banks often strive toward achieving financial sustainability, while NGOs try to provide services to poor people, to name a few (Nourani et al, 2022). The result of the subsample analysis (based on legal status) revealed that employee turnover has a statistically significant negative effect only for the NBFIs sample (Models 21 and 26).…”

“…For example, banks and rural banks are often subjected to prudent regulation, while NGO-MFIs can enjoy laxity in regulation. Similarly, the main objective of profit-oriented MFIs would be to maximize the profit/wealth of shareholders (Nourani et al, 2022). Hence, they would probably strive for better financial performance compared with their nonprofit counterparts.…”

I Want to Quit! Exploring Determinants of Turnover Intention among Employees of Microfinance Institutions

“…The sample consisted of only 21.4 per cent female employees, reflecting the ground reality of the gender gap in employment in MFIs. Despite the proven effectiveness of female leaders and staff in enhancing the performance of MFIs, there Contemporary Management Research 177 is low female representation in the workforce due to the challenging job nature and work environment (Nourani et al, 2021). A study of 104 Indian MFIs by Ghosh and Guha (2019) confirmed this gender gap at all levels and found that women constituted on average, 23 per cent of top management (board of directors), 8 per cent of middle management (managers/supervisors) and 11.7 per cent of lower management (staff).…”

Institutional factors and efficiency performance in the global microfinance industry

“…In general, these findings suggest that higher turnover of employees results in lower OPE of MFIs due to additional costs incurred during the recruitment and training of new employees. Because the microfinance industry is an informal, labour-intensive, and relationship-based lending industry (Nourani et al, 2021), therefore, employees play a crucial role in the execution and attainment of its goals and objectives. Hence, staff attrition is certainly disadvantageous to the MFIs, as it leads to lower efficiencies.…”