The Effect of Operational Risk Management on Microfinance Service Providers’ Performance in Thailand: The Mediating Effect of Corporate Governance

Abstract

Operational risk is one of the commonest types of risk faced by banks and financial institutions. Organizations are investing a lot on the practices to mitigate the negative outcomes of operational risks. In line with this, current study focuses on the effect of operational risk management on the performance of Saving and credit cooperative microfinance (SACCM) in Thailand. Based on the agency theory and system theory, this study has proposed a conceptual model to examine operational risk as a critical factor on the performance of microfinance cooperative service providers. A comprehensive research methodology is designed based on the context of the study. The proposed respondents of this research are managers and senior officers particularly in the risk and operations departments in saving and credit cooperative microfinance in Thailand. The results from this studied have shown that people risk and internal process risk were significantly and positively related to corporate governance and impact on performance of SACCM. The data used for this study are limited and applicable to SACCM in Thailand. The study findings may relate to financial and non-financial firms, managers, researchers, financial analysts, governments, accountants and stakeholders. Also, present research will give new insight to the researchers and will help them to consider the proposed model to implement and generalize in different settings.