Dynamic endogeneity and corporate governance–performance relationship: lessons from the microfinance sector

Sujani Thrikawala, Stuart Locke, Krishna Reddy
  • Journal of Economic Studies, August 2017, Emerald
  • DOI: 10.1108/jes-12-2015-0220

Corporate governance-performance relationship in Mcirofinance sector

Photo by Wil Stewart on Unsplash

Photo by Wil Stewart on Unsplash

What is it about?

The purpose of this paper is to examine the relationship between corporate governance (CG) and microfinance institution (MFI) performance, using a dynamic panel generalized method of moments (GMM) estimator to mitigate the serious issues with endogeneity.

Why is it important?

These findings provide some insights for policy-makers and practitioners to develop suitable policies and guidelines to streamline MFIs’ operations in emerging countries. Moreover, national and international investors and donors may use these finding as a benchmark for their investment and funding decisions.

Perspectives

Dr Krishna Reddy
University of Waikato

This paper is the first to estimate the CG and performance relationship of MFIs in a dynamic framework by applying the GMM estimation method. This approach improves upon traditional estimation methods by controlling the likely sources of endogeneity. Further, this paper examines whether the quality of national-level governance characteristics is related to performance measures of profitability and outreach of MFIs.

Professor Stuart Locke
University of Waikato

This paper is the first to estimate the CG and performance relationship of MFIs in a dynamic framework by applying the GMM estimation method. This approach improves upon traditional estimation methods by controlling the likely sources of endogeneity. Further, this paper examines whether quality of national-level governance characteristics is related to performance measures of profitability and outreach of MFIs.

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http://dx.doi.org/10.1108/jes-12-2015-0220

The following have contributed to this page: Dr Krishna Reddy, Professor Stuart Locke, and Dr Krishna Reddy