Suchergebnisse

Purpose
The purpose of this paper is to examine the relationship between corporate governance (CG) and microfinance institution (MFI) performance, using a dynamic panel generalised method of moments (GMM) estimator to mitigate the serious issues with endogeneity.


Design/methodology/approach
Inconsistent findings and a general lack of empirical results for the microfinance industry leave an unclear message regarding the impacts of CG on MFI performance, especially in emerging economies. The authors use GMM estimation techniques to examine whether CG has an influence on MFI performance.


Findings
This study confirms that the MFIs' contemporaneous performance and CG characteristics are statistically significantly positively linked with their past performance. This study finds statistically significant governance effects on MFI performance, including the presence of international directors and/or donor representatives on the board, client representatives on the board, percentage of non-executive directors and the quality of the national governance system.


Practical implications
These findings provide some insights for policy-makers and practitioners to develop suitable policies and guidelines to streamline MFIs' operations in emerging countries. Moreover, national and international investors and donors may use these finding as a benchmark for their investment and funding decisions.


Originality/value
This paper is the first to estimate the CG and performance relationship of MFIs in a dynamic framework by applying the GMM estimation method. This approach improves upon traditional estimation methods by controlling the likely sources of endogeneity. Further, this paper examines whether quality of national-level governance characteristics is related to performance measures of profitability and outreach of MFIs.

PurposeThe purpose of this paper is to investigate the relationship between board structure, financial performance and outreach of microfinance institutions (MFIs) in Sri Lanka, using unbalanced panel data for 300 MFI-year observations for the period 2007 to 2012.Design/methodology/approachEmpirical research relating to governance practices in MFIs is still in its infancy, and further studies are needed to determine how improved governance practices may enhance sustainability and outreach of MFIs, especially in emerging economies. The authors use regression techniques to examine whether board structure has an influence on MFI performance.FindingsAfter controlling for internal corporate governance variables, regulatory status, size, age, leverage and year effects, the authors report that board structure does contribute to the financial performance and outreach of MFIs in Sri Lanka.Research limitations/implicationsThe availability of data in the public domain captures the major MFIs but does constrain the generalisability of findings.Practical implicationsThis study enables individual MFIs to evaluate potential restructuring of their boards to promote a dual mission and achieve a more accelerated economic development.Social implicationsThe findings may encourage policy makers to promulgate policy guidelines to deepen MFI outreach to the poorest people.Originality/valueInconsistent findings in prior studies and a general lack of empirical results for the microfinance industry have led to an unclear message regarding corporate governance and MFI performance. This study fills the research gap, contributing to the existing corporate governance literature in the microfinance sector and providing evidence from an emerging economy.

The relationship between governance and the performance of microfinance institutions (MFIs) is discussed in this paper. MFI performance encompasses both financial performance and outreach. Good governance in terms of strengthening stewardship, achievement of MFIs' primary objectives and promoting further development of the industry have been asserted as key elements in the literature pertaining to MFI performance. Similarly, several cases concerning poor governance have been analysed. Good corporate governance has become more important due to the demand for transparency and accountability of funds utilised in microfinance activities. Further, MFIs need to have a solid governance framework to minimise the possibilities of management failures which may jeopardise the efficacious application of received funds from governments and donors. In prior studies, the nature of corporate governance practised by MFIs is less understood and no substantive work using multiple MFI outcomes over a number of years has been undertaken. The concerns raised in reviews of individual MFIs and normative discussions of what should constitute best practice do point to the need for better understanding of the nature of corporate governance practised by the MFIs and also, to understand the nature of the relationship that exists between institutional success and corporate governance especially for developing countries. This study therefore identifies and provides a framework for undertaking corporate governance research relating to MFIs.