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Article

Go for a Woman if you Feel Risky: Evidence from Gender Diversity in MFIs

Journal of Corporate Finance Research. 2019. Vol. 13. No. 3. P. 19-34.
Kokoreva M. S., Stepanova A. N., Alsu Khisamitova.

The paper contributes to the literature on the management and corporate governance in microfinance institutions. Microfinance market is one of the rare markets with the great representation of women in management and governance. The objective of our paper is to reveal the effects of women’s presence on financial and social performance of microfinance institutions controlling for risks. We develop a model that allows for capturing the gender diversity influence on financial and social performance controlling for risks in Eastern Europe and Central Asia. We focus on the role of women among loan officers, in the boards of directors or the management in the creation of microfinance institutions social or financial performance. The model of two sets of panel data regressions for social and financial performance is tested on the data of 193 microfinance institutions of Eastern Europe and Central Asia for 2010 to 2014 financial years. We find out that female management, CEO and members of boards of directors could increase performance for riskier microfinance institutions with greater stake of portfolio with more than 90 days in arrears. We also state that women on boards try to promote the strategy of large quantity of small loans with greater interest. The social performance of microfinance institutions is crucially determined by the microfinance institutions’ size.  For largest microfinance institutions the questions of social performance lie in the field of boards of directors while for smaller microfinance institutions’ social performance is mostly driven by CEO and staff with the evident positive female role.