The purpose of this study was to investigate whether the percentage of female borrowers moderate the effect of female leadership on financial sustainability of microfinance institutions (MFIs).
The study collected an unbalanced panel data of 821 MFIs between 2007 and 2018 from the Microfinance Information Exchange (MIX). MFIs’ financial sustainability was measured as operational self-sufficiency (OSS). The data were analyzed using the fixed effect regression model.
The study found that having women participation in managerial and board positions has a positive effect on OSS. The results further demonstrated that the proportion of female loan officers and female borrowers had a negative effect on OSS. In addition, the study’s findings revealed that the percentage of female borrowers moderated the relationship between female board members, female managers, female loan officers and OSS.
These findings may offer important insights to policymakers and practitioners in formulating strategies to improve financial inclusion for women by examining the inherent link between female borrowers and women’s participation in leadership roles within MFIs, which affects the financial sustainability of these entities.
This study is among the few that have examined the interaction between the proportion of female borrowers and other forms of female participation, including loan officers, managers and board members, and its effect on the financial sustainability of MFIs.
