Corporate Governance Practices and Microfinance Institutional Performance in Ghana

Salifu, Issahaku (2024) Corporate Governance Practices and Microfinance Institutional Performance in Ghana. Doctoral thesis, Birmingham City University.

Issahaku Salifu PhD Thesis published_Final version_Submitted Mar 2023_Final Award Apr 2024.pdf - Accepted Version

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Microfinance is one effective way of alleviating poverty by providing access to credit and financial services to the unbanked who do not have access to these services from mainstream banking institutions. The failure of microfinance institutions (MFIs) in recent times has shifted the attention to the corporate governance (CG) of MFIs. CG is a system in which MFIs are governed and controlled in achieving their double-bottom objectives of financial and social performance. Stakeholders in the microfinance literature have attributed the failures of MFIs to poor CG practices in Ghana. Thus, this study critically examines the perceptions of corporate governance practices in Ghana and the relationship between CG mechanisms on the performance of MFIs. The study is quantitative and adopts both primary and secondary data. Questionnaires were used on a sample of 122 stakeholders (managers/deputy managers, board members, accountants, internal auditors, and other senior staff) of 17 MFIs across 5 regions in Ghana. A second set of questionnaires was used to collect CG mechanisms and social performance information from the 17 managers. Financial statements for the 2019 -2020 fiscal year were used to calculate ratios as financial performance indicators. Purposive and convenient sampling techniques were used. The study employed – Panel Ordinary Least Square (OLS) regression analysis to examine the relationship between CG mechanisms and MFI performance in Ghana. Descriptive statistics were used to examine the implementation of CG principles, challenges, and factors impacting the implementation of CG in MFIs in Ghana. The study found that MFIs in Ghana largely implemented Organisation for Economic Cooperation and Development (OECD) CG principles. The study identified challenges to CG implementation as well as factors that could impact the implementation of CG in MFIs in Ghana. The study uncovered a mixed result that board size has a significant negative association with (ROA and ROE) and a significant positive association with (OCR and YoGLP) of MFIs' financial performance. Board size has a significant negative relationship with MFIs' social performance measures (breadth of outreach and female borrowers). Board composition has no significant relation with MFIs' financial or social performance in Ghana. Female director presence on MFIs board is statistically positively associated with MFIs social performance (breadth of outreach). Based on the findings, the study suggests stringent monitoring regime and training for MFIs on CG, establishment of a central database for MFIs in Ghana to facilitate CG research in MFIs, facilitation of merger of selected MFIs to make them efficient and sustainable in their operations, a quota of female board member representation in MFIs among others. Finally, the study developed a CG model to aid the review of the Bank of Ghana CG Directive 2018 and the establishment of a national CG code in Ghana to promote economic development in Ghana. The major contribution of this study is the examination of CG in MFIs in Ghana. This research contributes to closing a significant gap in the literature about corporate governance practices in MFIs in Ghana. Undoubtedly, this study not only contribute to knowledge in Ghana but also to other developing countries with similar socio-economic and cultural environment.

Item Type: Thesis (Doctoral)
March 2023Submitted
8 April 2024Accepted
Subjects: CAH17 - business and management > CAH17-01 - business and management > CAH17-01-07 - finance
Divisions: Doctoral Research College > Doctoral Theses Collection
Faculty of Business, Law and Social Sciences > Birmingham City Business School > Centre for Accountancy Finance and Economics
Depositing User: Jaycie Carter
Date Deposited: 08 May 2024 13:43
Last Modified: 08 May 2024 13:43

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