An empirical analysis of corporate governance impact on outreach of microfinance institutions (MFIs)

Abstract

This study examines the impact of corporate governance practices of microfinance institutions (MFIs) on outreach to the poor people in Sri Lanka by using three outreach variables: Breadth of outreach, percentage of women borrowers and depth of outreach. Data for 54 MFIs are analysed using regression analysis of unbalanced panel data from 2007 to 2012. The findings of this study revealed several significant relationships: Breadth of outreach in Sri Lankan MFIs improve when they have a female chair on the board but decreases when they have more female directors and client representation on the board, and female borrowers get more loans when the firm has women representation and international/donor directors on the board, but less loans if they have a female chair. This study provides a direction for future researchers to explore more, and recommend good corporate governance practices for MFIs to reach more poor clients.