Women on Board and its Impact on Performance: Evidence from Microfinance Sector

Abstract

The board of directors is the most imperative facet of corporate governance for any corporation as it is responsible for approving financial decisions, policy formulation as well as strategic decisions. Consequently, their composition is a solemn issue for the company at all times. Recent years have evidenced a steep amplify in the board diversity by enhancing the representation of women in corporate leadership. Diverse boards with individuals having different background perhaps tends to be more innovative and make better decisions. It could enhance the boards’ functioning, sharpen strength and bring a more diverse perspective. Meanwhile, the participation of women in decision-making is one of the most divergent factors which has been given a push in the form of law with enactment of The Company Act, 2013. Thus, this study mainly illustrates the relevance of women in microfinance and empirically examines the association between participation of women on board and in senior management with the performance of microfinance industry, using a sample of 50 Non-banking Financial Companies–Microfinance Institutions (NBFC–MFIs). It is evident that there is a positive and significant impact of women as board members with the financial performance and of senior management with social performance in context to Indian MFIs. Thus, it is suggested that MFIs should think about the femininity on board and in senior management to improve financial viability and social performance to achieve sustainable growth.

Keywords

Women board financial performance social performance microfinance institutions

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