Abstract. This paper examines empirically the relation between governance mechanisms and the performance of EuroMediterranean microfi nance institutions (MFIs) in terms of outreach and sustainability. Specifi cally, we found that performance-based compensation of managers is not associated with better performance of MFIs. The results identify trade-offs between MFIs outreach and sustainability depending on larger board size, and on higher proportion of unaffi liated directors. Moreover, the study shows that the more women there are on the board the better the performance, and reveals that external governance mechanisms help MFIs to achieve better fi nancial performance. This study also allows us to distinguish other factors leading to better sustainability such as Regulation, and the use of individual lending methodology. However, the MFIs, active as NGOs, seem to be more consistent with their social mission than with their fi nancial performance.