Female Advantage? Management and Financial Performance in Microfinance

Abstract

The purpose of the article is to investigate whether female presence in microfinance institutions’ management team, i.e. board members, managers and loan officers, will improve their financial performance. We combine financial data on MFIs that is available from the MIX Market database with original data on the gender composition of MFIs’ management team, who include board members, managers and loan officers. This original dataset of 223 MFIs is analyzed using Logit-Tobit regression models with return on assets (ROA) as the dependent variable and proportion of female board members, female loan officers and female managers as the main independent variables. We find that a higher proportion of female managers and female loan officers improve financial performance in microfinance, while a higher proportion of female board members does not. Our results indicate that a major contributor to the financial sustainability of microfinance institutions is having a higher rate of women in vital decision-making roles, especially lower level management positions.

Environmental, social, and governance integration: the case of microfinance institutions

“…Although women are underrepresented on MFI boards (Mahadeo et al, 2012) research has found female board members are associated with better financial performance (Mersland and Strøm, 2009;Strøm et al, 2014;Chakravarty and Pylypiv, 2017;Vishwakarma, 2017) and social performance (Hartarska et al, 2014;Gohar and Batool, 2015;Velte, 2016;Gudjonsson et al, 2020). Hendry and Kiel (2004) also found that having women on the boards of MFIs helps to address gender inequality issues arising from institutional voids in part due to their own personal experiences.…”

Female empowerment/participation in the workplace and firm performance: a study of privately-owned firms

“…Several recent studies apply Tobit regression models (e.g. Gudjonsson et al , 2020). Examining the effect of female participation/empowerment on firm performance in Lebanese firm-level data, we estimate the following baseline model [2]:…”

“…Accordingly, our data are cross sectional covering the year 2013. From an econometric point of view, we use Tobit regressions, recently used by Gudjonsson et al (2020), to test the various hypotheses regarding the association between female participation/empowerment and firm performance.…”

Participation of women in the South Asian microfinance industry: An observation

“…Based on the organizational ladder of MFIs, women can participate in three different important management positions – board members, managers, and loan officers (see Figure 1). Behavioral economics suggest the presence of a variation in economic decisions between male and female (Hartarska, Nadolnyak, & Mersland, 2014), and that the effects of women on various dimensions of MFIs performance (e.g., financial sustainability & social outreach) were significantly positive in general (Augustine et al, 2016; Boubacar, 2019; Ghosh & Guha, 2019; Gudjonsson, Kristinsson, Gylfason, & Minelgaite, 2020; Strøm, D'Espallier, & Mersland, 2014).…”

“…Although, the role of women on the performance of MFIs is well established through rigorous and empirical research (Adusei, Akomea, & Poku, 2017; Bibi, Balli, Matthews, & Tripe, 2018; Boubacar, 2019; Ghosh & Guha, 2019; Gudjonsson et al, 2020; Memon, Akram, & Abbas, 2020; Pedrini, 2018; Vishwakarma, 2017), very little is known of the manifestation of women in the management role and clients base of the South Asian microfinance market. With the recent and remarkable progress in socio‐economic development of the South Asian countries, it is deemed important to examine how it has impacted gender diversity, particularly in the MFIs workforce.…”