Corporate Governance and Performance of Microfinance Institutions: A Case Study of Rwanda

Gustave, Tombola Masereri (2012) Corporate Governance and Performance of Microfinance Institutions: A Case Study of Rwanda. ["eprint_fieldopt_thesis_type_phd" not defined] thesis, The Open University of Tanzania.

Preview

PDF Download (2MB) | Preview

Abstract

Being a developing country, Rwanda is struggling with the culture of saving and credits by poor but economically active population. Given that this portion of the population generally does not access the classic banking system, it becomes client of the microfinance institutions to grow up their culture of banking. The microfinance institutions mobilize savings from its clients and use the savings to finance the economic activities of their clients in form of loans. In 2006, some MFIs failed to reach their performance due to many factors most of which have not yet been researched. The study was led by one question which states thus: Is there a link between corporate governance is linked to the performance of MFIs. Whilst there have been many studies carried out to determine whether there is a link between corporate governance and corporate performance, the evidence appears to be fairly mixed. To show evidence of good performance, MFIs have to reach out to all places in the country and impact on the lives of their clients and to ensure their own sustainability. Given the fact that corporate governance is a new and wide concept, the researcher considered some of its components such as board size, board composition, non-CEO duality and the supervision of MFIs to assess the performance of MFIs in Rwanda. The researcher used survey methods using a questionnaire, an interview and focus group to gather data to be used for finding out the correlation between the corporate governance and the performance of MFIs in Rwanda. The questionnaire designed by the researcher was found to be valid and reliable through the review of peers in universities in Kigali and the Cronbach’s Alpha yielded a reliability coefficient of .949. The probabilistic and non-probabilistic sampling techniques were used to collect data. Simple random sampling technique was selected as probabilistic technique while judgemental and quota sampling techniques were selected as non-probabilistic techniques. Using descriptive statistics like frequency and correlation calculations thanks to the cross tabulation, the relationship between corporate governance and performance of MFIs in Rwanda was found. The researcher concluded that some components of corporate governance have a correlation with the performance of MFIs in Rwanda and others have no correlation with the performance of MFIs in Rwanda. For the board size and corporate governance and the performance of MFIs, the results were mixed. The findings on the correlation between board composition and performance of MFIs were also mixed. The same thing applies for the supervision of MFIs and their performance. The researcher found that there is correlation between the non-CEO duality and the performance of MFIs in Rwanda. Future researchers may tackle the link between other aspects of corporate governance and the performance of MFIs.

Actions (login required)

View Item