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The purpose of this study is to examine the impact of need for achievement (NFA) and board creativity on financial performance. Furthermore, it attempts to investigate the mediating role of board diversity between need for achievement and financial performance. The assessment and estimation of how need for achievement and board creativity is associated with financial performance has not been previously provided. Using a self-administered survey to sample the Tanzanian microfinance institutions (MFI), the research measurement scale was adopted from previous studies, and data were collected from 189 MFIs. Drawing from McClelland, Institutional, Upper Echelons and agency theories’ insights, the proposed conceptual model and associated hypotheses were formulated and tested using structural equation modeling. The empirical findings indicate that the need for achievement has a positive significant direct impact on financial performance. Also, the need for achievement has a positive significant impact on board creativity. Furthermore, board creativity has a positive significant impact on financial performance. Moreover, the study finds that board creativity positively mediates the relationship between need for achievement and financial performance. Therefore, this study has several empirical, theoretical, and practical implications and recommendations regarding the corporate governance literature, finance, and entrepreneurship practices.

This study examines the nexus between credit expansion and the financial sustainability of microfinance institutions (MFIs) in Sub-Saharan Africa (SSA). The study also examines the interaction effects of credit expansion and interest rate/portfolio quality on MFI sustainability. The study relies on panel dataset of 136 MFIs across 31 SSA countries covering the year 2004 to 2018 and applies the Arellano-Bover/Blundell-Bond two-step Generalized Method of Moments (GMM) Windmeijer bias-corrected standard errors to analyze the data. The results establish that credit expansion matters in MFI financial sustainability. Specifically, the study uncovers that while the size of the loan portfolio and loan intensity are positively associated with MFI sustainability, the economic significance of loan intensity is higher. On the other hand, the other credit expansion proxy “credit growth” does not predict the sustainability of MFIs. The results also reveal that the loan intensity and potfolio at risk have interaction effects on MFI sustainability. However, the study fails to support an asymmetric effect of credit expansion on financial sustainability depending on the interest rate charged on loans. The study uses three proxies for credit expansion and gives useful insights for policymakers and/or MFI managers that loan intensity should be the main target of MFIs if the goal is to attain financial self-sufficiency. The study also examines the interaction effects of credit expansion and interest rate/portfolio quality on MFI sustainability and sheds light on what is expected from MFI managers to expand credit access to the poor without compromising sustainability.

The introduction of microfinance institutions is viewed as the best alternative source of financial services for low-income earners as a means to raise their income and reduce poverty. However, empirical research has indicated that the majority of microfinance institutions’ borrowers are over-indebted. Over-indebtedness has negative consequences for debtors, creditors, and for the economy as a whole. Since over-indebtedness is a context-specific phenomenon, it lacks universally accepted indicators. This study aims to validate indicators of over-indebtedness and examine the situation of over-indebtedness among micro-borrowers in the context of Tanzania. A survey of 535 micro-borrowers was conducted using a semi-structured questionnaire. Descriptive, thematic, and logistic regression techniques were employed for data analysis. Findings show that debt-to-income ratio, multiple borrowing, and delinquency have a positive and significant effect on over-indebtedness. Further, findings indicate that over-indebted micro-borrowers in Tanzania spend 75% or more of monthly income on servicing debts; are in the state of delinquency; are unable to meet basic needs due to loan repayment expenditure, have three or more credit commitments, and are in delinquency. To reduce over-indebtedness and hence poverty among micro-borrowers, microfinance institutions are advised to monitor debt levels among micro-borrowers, and reschedule loan repayment plans to already over-indebted micro-borrowers.

The purpose of this study is to examine the role of intellectual capital and isomorphic forces in strengthening internal controls over financial reporting (ICFR) in microfinance institutions (MFIs). This study is cross-sectional and correlational. Data were collected through a questionnaire survey of 66 MFIs that are members of the Association of Microfinance Institutions of Uganda (AMFIU). Both intellectual capital and isomorphic forces positively and significantly contribute to the strength of ICFR. In terms of control variables, ownership structure, capital structure and firm age are not significant predictors of ICFR. Policy-wise, the regulator(s) of MFIs should always issue-specific and time-bound directives to MFIs with ICFR shortfalls to enhance their control environment. Also, the responsibility of maintaining adequate ICFR should be extended to the management of MFIs by tasking them to account for lapses in ICFR. This would reduce incidences of senior management usurping the powers of the board, which would lead to overriding of ICFR. Also, policies should be specific on the composition of the board to improve its intellectual potential. To the authors’ knowledge, this study provides initial empirical evidence of the influence of intellectual capital and isomorphic forces in strengthening ICFR in MFIs using evidence from a developing African country. Overall, this study found that intellectual capital (entity factor) and isomorphic forces (institutional factors) are all predictors of ICFR. This is possible because managers, employees and those charged with governance of the entity can be influenced by institutional forces that affect ICFR positively.

The present paper examines the impact of financial and social performance of microfinance institutions (MFIs) on lending interest rate. The paper has covered five-star-rated MFIs in all the six regions of the world individually and collectively for the period of 2006–2012. Data for 382 MFIs belonging to 70 countries around the world have been taken from the Microfinance Information Exchange (Mix Market). Financial performance is captured through return on assets, return on equity, and operational self-sufficiency, whereas social performance is measured through average loan size and number of credit clients. The lending interest rate is a weighted average of the interest rates actually received by the MFIs from their clients. The paper incorporated some control variables to capture variations in size, age, location, and infrastructure of MFIs. Panel data estimation techniques have been applied to find out the empirical association between the selected variables. Most of the results have shown that cost of funding, return on assets (ROA), and the number of credit clients have a significant positive impact on lending interest rate around the world. However, depth outreach as depicted by average loan size has significant inverse relation with lending interest rates. Moreover, results also highlight different factors that affect the productivity of MFIs around the world.

We investigate board and management gender diversity issues in the microfinance setting with data (2010–2014) drawn from 494 microfinance institutions across 76 countries. We find that board gender diversity positively predicts management gender diversity. On the effects of board and management gender diversity on the financial performance of microfinance institutions (MFIs), we find that whereas board gender diversity is negatively and significantly related to MFI financial performance, management gender diversity is negatively but insignificantly related to MFI financial performance. We show that 50% or higher diversity in either board or management is the threshold at which gender diversity is productive to MFIs. However, danger exists that an MFI that combines 50% or higher female representation on its board with 50% or higher female representation on its management team is likely to experience a tumble in its financial performance. The overall effect of these outcomes is that the push for more female representation on boards and management teams of MFIs should be done with a lot of tact and circumspection.