Gender, Performance and Governance in Microfinance Institutions

Does female leadership influence MFI performance?
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This paper investigates relationships between female leadership, firm performance, and corporate governance in a global panel of 379 microbanks in 73 countries.

The microfinance industry’s newness, its market orientation and diverse institutional conditions make it a potentially advantageous place to study gender impact. Being young and entrepreneurial, microbanks do not bear the weight of traditional male domination.

Most microbanks target women customers. The paper hypothesizes that female leadership should be a competitive advantage for the microbank, because a female leader may more easily tap into local information sources and be able to set up products better suited for the microbanks’ customers than their male peers. Study findings include:

  • About 27% of microbanks in the sample are led by a female chief executive officer (CEO);
  • Female leadership is significantly associated with larger boards, younger firms, a non-commercial legal status, and more female clientele;
  • Female CEOs and chairpersons are positively related to microbank performance;
  • Female leadership is negatively related to corporate governance indicators such as number of board meetings and separation of the CEO and chairman roles.

About this Publication

By Strom, R.O., Espallier, B. & Mersland, R.