Institutional quality and the capital structure of microfinance institutions: the moderating role of board gender diversity

We test the effect of institutional quality on capital structure in the microfinance setting. In doing this, we rely on data from 532 microfinance institutions (MFIs) located in 73 countries dotted across the six microfinance regions in the world. We observe that institutional quality exhibits a rob...

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Bibliographic Details
Published in:Journal of institutional economics 2021-08, Vol.17 (4), p.641-661
Main Authors: Adusei, Michael, Sarpong-Danquah, Beatrice
Format: Article
Language:English
Subjects:
Accountability
Capital structure
Corruption
Directors
Economic theory
Financial services
Funding
Gender
Influence
International finance
Microfinance
Property rights
Rule of law
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Summary:We test the effect of institutional quality on capital structure in the microfinance setting. In doing this, we rely on data from 532 microfinance institutions (MFIs) located in 73 countries dotted across the six microfinance regions in the world. We observe that institutional quality exhibits a robust negative and statistically significant relationship with capital structure in both the short and long run, implying that MFIs in countries with a better institutional environment are less likely to utilize more debt. Our moderation analysis furnishes us with evidence that the presence of women on the board of an MFI significantly moderates the relationship between institutional quality and its capital structure. We show that in the presence of more female representation on the boards of MFIs, the tendency of MFIs using less debt is higher.
ISSN:1744-1374
1744-1382
DOI:10.1017/S1744137421000023