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Impact of stakeholders as board members on sustainability and social outreach of microfinance institutions in developing markets

Lookup NU author(s): Dr Iftekhar Ahmed

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Abstract

The purpose of this study is to explore how stakeholders on the board contribute to sustainability and outreach of microfinance institutions (MFI). Stakeholders as board members can influence the social outreach and sustainability of microfinance institutions (MFIs). By applying a multi-theoretical approach to a longitudinal dataset from a developing country perspective, this study analyses stakeholder involvement on the MFI board and its impact on double-bottom-line performance. The results suggest that independent directors on the board have significantly positive effects on achieving microfinance institutions' dual missions: sustainability and outreach. However, some stakeholders have produced mixed results. Employees, donors, and female board members play significant roles, although their impacts are moderated by the age and size of MFIs. CEO duality contributes to MFI sustainability but inversely affects outreach. The results support the stakeholder, stewardship, and resource dependence theories. This study recommends the appointment of an independent board member as a social director to widen the range of stakeholders' involvement in the boards of MFIs and contribute to achieving its objectives in a developing market context.


Publication metadata

Author(s): Hussain MD, Muhammad M, Ahmed I, Hossain MTB

Publication type: Article

Publication status: Published

Journal: International Journal of Managerial and Financial Accounting

Year: 2023

Volume: 15

Issue: 1

Pages: 26-49

Acceptance date: 14/11/2022

ISSN (print): 1753-6715

ISSN (electronic): 1753-6723

Publisher: Inderscience Publishers (IEL)

URL: https://doi.org/10.1504/IJMFA.2023.127523

DOI: 10.1504/IJMFA.2023.127523


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