Female on boards and the risk-taking of microfinance institutions: The moderating role of outreach

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Michael Adusei


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This study examines the effect of female on boards on risk-taking with data from 401 microfinance institutions (MFIs) drawn from 64 countries. The study also investigates whether the effect is sensitive to the outreach performance of MFIs. The MFIs sampled for this study are spread across the six MFI regions. The study measures MFI risk by its risk-taking Z-score and risk-adjusted return on assets. The fixed effects estimation technique, known to overcome the omitted variable bias, is deployed to analyze the data. The results show that female representation in the boardroom increases the risk-taking of MFIs. However, when female on boards interacts with the depth of outreach performance of an MFI, its positive impact on MFI risk is observed. It suggests that female directors are more likely to be beneficial to risk management in MFIs that lend more to indigent clients. Several tests, including an instrumental variable test for endogeneity, have been conducted to confirm the robustness of these results.

Keywords: Female on Boards, Stability, Risk-Taking, Microfinance Institutions, Outreach

Authors’ individual contributions: The Author is responsible for all the contributions to the paper according to CRediT (Contributor Roles Taxonomy) standards.

Declaration of conflicting interests: The Author declares that there is no conflict of interest.

JEL Classification: G20, G21, G23

Received: 13.04.2020
Accepted: 10.06.2020
Published online: 16.06.2020

How to cite this paper: Adusei, M. (2020). Female on boards and the risk-taking of microfinance institutions: The moderating role of outreach. Corporate Board: Role, Duties and Composition, 16(2), 19-34. https://doi.org/10.22495/cbv16i2art2