Performance and governance in microfinance institutions

Mersland, Roy; Strøm, R. Øystein

doi:10.1016/j.jbankfin.2008.11.009

Cited by 502 publications

(672 citation statements)

References 41 publications

(41 reference statements)

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“…In a recent study, Mersland and Strøm (2007), use a self-constructed global data set on MFIs spanning 57 countries collected from third-party rating agencies. The authors study the effect of board characteristics, ownership type, competition and regulations on the MFIs outreach to poor clients and its fi nancial performance.…”

Section: Literature Reviewmentioning

confidence: 99%

“…These dual objectives (social: outreach, and financial: sustainability) make diffi cult the study of governance of MFIs, especially with their different types: Non-profi t, Non-Governmental Organizations (NGOs), For-profi t Microfi nance Institutions, Credit Unions. This challenge is surmounted by formulating and testing hypothesis based on insights from the literature on corporate governance, former studies (Hartarska 2005;Mersland and Strøm 2007;Cull et al 2007), governance in banks and in Non-profi t organizations, and by estimating the impact of the governance mechanisms on both sustainability and outreach.…”

Section: Conceptual Framework and Working Hypothesismentioning

confidence: 99%

“…In microfi nance, the study of Kyereboah-Coleman (2006) shows that having women in CEOs on MFI boards enhance performance, and also the more women there are on the board, the better the performance. Furthermore, having a high fraction of women in the board would help the MFI understand its customers better so as to separate the good risk from the bad (Mersland and Strøm, 2007). Hypothesis 4.…”

Section: Hypothesis 2 Board Size Should Have An Inverse Correlation mentioning

confidence: 99%

“…It seems relevant to examine closely the role of various governance mechanisms since MFIs managers control signifi cant resources. Except the study of Hartarska (2005), and those of Mersland and Strøm (2007), and Cull et al (2007), no more studies attempt to shed light on the link between governance and performance, especially in the Euro-Mediterranean countries, although it is a very active zone with a microfi nance industry quite diverse (NGO 2 , NBFI 3 , Bank) where actors should simultaneously pursue the most effective way of realizing their social objective while achieving superior levels of profi tability.…”

Section: Introductionmentioning

confidence: 99%

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Governance and Performance of Microfinance Institutions in Mediterranean Countries

Bassem

2009

Journal of Business Economics and Management

135

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Abstract. This paper examines empirically the relation between governance mechanisms and the performance of EuroMediterranean microfi nance institutions (MFIs) in terms of outreach and sustainability. Specifi cally, we found that performance-based compensation of managers is not associated with better performance of MFIs. The results identify trade-offs between MFIs outreach and sustainability depending on larger board size, and on higher proportion of unaffi liated directors. Moreover, the study shows that the more women there are on the board the better the performance, and reveals that external governance mechanisms help MFIs to achieve better fi nancial performance. This study also allows us to distinguish other factors leading to better sustainability such as Regulation, and the use of individual lending methodology. However, the MFIs, active as NGOs, seem to be more consistent with their social mission than with their fi nancial performance.

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Section: Literature Reviewmentioning

confidence: 99%

Section: Conceptual Framework and Working Hypothesismentioning

confidence: 99%

Section: Hypothesis 2 Board Size Should Have An Inverse Correlation mentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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Governance and Performance of Microfinance Institutions in Mediterranean Countries

Bassem

2009

Journal of Business Economics and Management

135

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“…Ratings data are considered among the most representative available for the microfinance industry (Mersland & Strøm, 2009 MFI rating assessments are much wider than traditional credit ratings, since they aim to measure…”

Section: Data and Variable Definitionsmentioning

confidence: 99%

Female Leaders and Financial Inclusion. Evidence from Microfinance Institutions

2016

Self Cite

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This research advances the hypothesis that female leaders -chief executive officers (CEOs), chairs, and directors -of a microfinance institution (MFI) give more priority to the poorest families in loan provision than male leaders do. We differentiate between a depth and a width dimension of financial inclusion. The data set is a unique global panel of MFIs collected from MFI raters' reports. Our sample is also unique in the sense that about one-third of all MFIs have a female CEO. The problem of endogeneity for the female leader is resolved by running Heckman's two-step endogenous dummy variable estimation with an instrument for the female leader. We find evidence of greater depth financial inclusion (smaller average loans, more gender bias) with a female leader but not for width financial inclusion (credit client growth). Female leaders exhibit greater altruism and greater competition avoidance but not greater risk aversion than male peers. ABSTRACTThis research advances the hypothesis that female leaders -chief executive officers (CEOs), chairs, and directors -of a microfinance institution (MFI) give more priority to the poorest families in loan provision than male leaders do. We differentiate between a depth and a width dimension of financial inclusion. The data set is a unique global panel of MFIs collected from MFI raters' reports. Our sample is also unique in the sense that about one-third of all MFIs have a female CEO. The problem of endogeneity for the female leader is resolved by running Heckman's two-step endogenous dummy variable estimation with an instrument for the female leader. We find evidence of greater depth financial inclusion (smaller average loans, more gender bias) with a female leader but not for width financial inclusion (credit client growth). Female leaders exhibit greater altruism and greater competition avoidance but not greater risk aversion than male peers. JEL codes: G34; M12; M14

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Determinants of the Performance of Microfinance Institutions: A Systematic Review

Hermes

Hudon

2019

Contemporary Topics in Finance

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Microfinance institutions (MFIs) generally aim at improving the access of the poor to financial services while at the same time being financially sustainable. But what do we know about how MFIs reach and combine these two goals? We carry out a systematic review of close to 170 articles discussing the determinants of the financial and social performance of MFIs. The review shows that the most important determinants addressed in the literature are MFI characteristics (size, age, type of organization), their funding sources, the quality of organizational governance and the MFIs' external context such as macroeconomic, institutional and political conditions. The evidence on these issues is rather mixed.Moreover, the direction of the relationship between these drivers and MFI performance depends on the context, particularly the country-specific context. Finally, there is a lack of consensus in the literature on the measurement of financial and social performance. Due to the complexity of the concept, we argue that social performance should only be assessed by using a multidimensional perspective. This can be done either by applying recent and holistic social performance measures such as the SPI4, or at least by using a combination of proxies, such as outreach, gender and rural measures. Burzynska, K., & Berggren, O. (2015). The impact of social beliefs on microfinance performance.

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Performance and governance in microfinance institutions

Cited by 502 publications

References 41 publications

Governance and Performance of Microfinance Institutions in Mediterranean Countries

Governance and Performance of Microfinance Institutions in Mediterranean Countries

Female Leaders and Financial Inclusion. Evidence from Microfinance Institutions

Determinants of the Performance of Microfinance Institutions: A Systematic Review

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