Effects Of Board Characteristics On The Outreach Performance Of Microfinance Institutions In Kenya

Abstract

This study sought to examine the effects of board characteristics on the performance of MFIs in Kenya, largely on account of outreach performance. The specific objectives of this research include; to examine the effect of gender composition, board vigilance, and board independence on the outreach performance of MFIs, controlling for the effects of MFI type, size, and board size. The study will be important to the shareholders and management of MFI’s in Kenya. The study will inform the management of these organizations on the specific corporate governance mechanisms they need to put in place to ensure that their respective firms perform optimally. The study adopted a descriptive research design targeting a population of all the 43 MFIs registered by AMFI - Kenya. A census survey was used. A self – construct data set of all the 43 MFIs in Kenya was developed and used to collect secondary data for 2013. Additional information was collected using structured questionnaires. Data was analysed using descriptive statistics and inferential statistics on SPSS version 20; and summarised using percentages, means, standard deviations and frequencies. The information was presented using tables and figures. The findings showed that Board Independence, Gender Composition, and Board Vigilance all had a positive effect on Outreach Performance (Breadth). Qualitative analyses showed that board characteristics have an effect on firm performance, compliance, culture, fairness, and efficiency. The study recommends measures of board characteristics and firm performance to be enhanced to include more quality indicators and control variables. The Researcher further recommends that the study og governance charateristis be extended to the entire financial services sector in Kenya.