Effect of board gender diversity on the financial performance of microfinance institutions: Does judicial efficiency matter?

Abstract

The impact of board gender diversity on the financial performance of firms is not known. This is because empirical investigations have yielded inconclusive outcomes. This study engages data from 408 microfinance institutions (MFIs) covering the period 2010-2018 from the six microfinance regions to investigate this impact using the Least Squares Dummy Variable (LSDV) and the System Generalized Method of Moments (SYS-GMM) estimation techniques. The study also explores whether judicial efficiency exerts any significant effect on the board gender diversity-financial performance nexus. The study observes that board gender diversity exhibits a strong negative effect on the financial performance of MFIs. The study also observes that the effect of board gender diversity on the financial performance of MFIs escalates in the presence of judicial inefficiency. The study, therefore, unveils the judicial system as a channel through which gender diversity drives the financial performance of MFIs negatively.

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Fostering Inclusive Growth: Exploring Gender Dynamics and Loan Sizes in Microfinance Institutions

“…Despite the growing recognition of the importance of gender equality within microfinance, there is a significant gap in understanding the specific impact of gender dynamics (women's representation at different echelon positions and their involvement within the organizations) on LS outcomes. While previous researchers (Sarpong-Danquah et al, 2023;Illangakoon et al, 2021) have investigated the relationship between gender and various microfinance outcomes, such as rates of loan repayment, success in entrepreneurship and reduction in poverty but less attention has been given to the effect of WEP and their involvement on LS of MFIs. Whereas it is a crucial and vital metric that reflects the allocation of financial resources to consumers, and it significantly impacts their economic opportunities and prospects (Tahir et al, 2019).…”