Financial performance and corporate governance in microfinance: Evidence from Asia
Ahmad Nawaz and
Journal of Asian Economics, 2019, vol. 60, issue C, 1-13
Good corporate governance is considered a building block of success for microfinance institutions (MFIs) as it is presumed to help them in achieving their social and financial goals. This paper analyzes the corporate governance and financial performance relationship for MFIs in Asia. We make use of a panel dataset involving 173 MFIs in 18 Asian countries for the period 2007–2011. We construct a corporate governance index based on seven measures pertaining to board size and composition, CEO characteristics, and ownership type. We then estimate the two-way relationship between this index and each of five different financial performance indicators. To address the likely simultaneity between corporate governance and financial performance, we adopt a two-stage least squares estimation approach with instrumental variables. Our results confirm the endogenous nature of corporate governance and financial performance. We conclude that profitability and sustainability of MFIs improve with good governance practices and conversely that more profitable and sustainable MFIs have better governance systems.
Keywords: Microfinance; Corporate governance; Financial performance; Asia (search for similar items in EconPapers)
JEL-codes: G21 G30 G34 (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3) Track citations by RSS feed
Downloads: (external link)
Full text for ScienceDirect subscribers only
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:eee:asieco:v:60:y:2019:i:c:p:1-13
Access Statistics for this article
Journal of Asian Economics is currently edited by C. Wiemer
More articles in Journal of Asian Economics from Elsevier
Bibliographic data for series maintained by Haili He ().