Governance and Performance of Microfinance Institutions in Central And Eastern Europe and the Newly Independent States

Valentina Hartarska ()

William Davidson Institute Working Papers Series from William Davidson Institute at the University of Michigan

Abstract: This paper presents the first evidence on the impact of external governance mechanisms, board diversity and independence, and management compensation on outreach and sustainability of microfinance institutions in Central and Eastern Europe and the Newly Independent States. Results indicate that among external governance mechanisms only auditing affects outreach, whereas regulation and rating do not affect performance. Board diversity improves both outreach and sustainability while larger and less independent boards lower sustainability. Performance-based compensation is not effective in aligning the interest of managers and stakeholders, and underpaying managers reduces outreach.

Keywords: Central and Eastern Europe and the Newly Independent States; governance; microfinance; board of directors; managerial compensation; regulation; and rating (search for similar items in EconPapers)
JEL-codes: G21 G32 L22 L31 O16 P23 Q14 (search for similar items in EconPapers)
Pages: 34 pages
Date: 2004-04-01
New Economics Papers: this item is included in nep-eec, nep-eff, nep-mfd and nep-tra
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Journal Article: Governance and performance of microfinance institutions in Central and Eastern Europe and the Newly Independent States (2005)
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Persistent link: https://EconPapers.repec.org/RePEc:wdi:papers:2004-677

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