The Governance Structure of Microfinance Institutions: A Comparison of Models of Sustainability and their Implication on Outreach

Abstract

Purpose: This research aims to discover whether or not there is a connection between the governance structure of microfinance institutions (MFIs) and the outreach these organisations provide. The research looks at how the different kinds of MFIs, like Microfinance Banks (MFB) or Self-Help Groups (SHG), Microcredit Programme (MCP), and Rural Development Scheme (RDS), affect the number of people who can use MFIs' services. Design: In the process of the discussions and analysis, one microfinance institution from each of the three models will be considered. The country of Bangladesh will serve as the primary source of empirical study. The questionnaire was sent to the top managers or directors of MFIs to obtain the data for the research. The study relied on secondary data for the most part, which was mainly collected from the annual reports of these MFIs. Findings: The research discovered a connection between the governance structure of MFI outreach and the institution's capacity to maintain its operations. The three models all use the same method of operation, but they are pretty different in terms of the interest rate and the amount of time it takes to repay the debt. Research Limitations: The research is restricted to the materials (annual reports) made accessible by each MFI. Practical Implications: The results of this study are significant for understanding how microfinance will change in the future, as defined by the global development discourse and the public policy decisions that go along with it. Social Implications: The reduction of poverty, the empowerment of the poor, and improved access to financial services all contribute favourably to financial inclusion. It contributes to sustainable economic development. MFIs that have greater outreach and are more sustainable also have a good effect. Originality: The governing structure of MFIs hasn't been extensively studied, which influences the MFIs' outreach.