Exploring the effect of gender diversity in MFIs during turbulent periods

Abstract

Gender diversity is generally recognized as relevant in microfinance, and the relationship between gender diversity and firms’ performance has received attention in academic literature. The above-mentioned relationship has not been addressed until now in the microfinance industry specifically. This study seeks to explain the role played by gender diversity in the workforce of microfinance institutions (MFIs) during turbulent periods in the firms’ performance. The study analyses data from 555 ratings of 185 MFIs from MicroFinanza Rating, a leading microfinance rating agency. The analysis shows that the number of women on the staff of MFIs is significantly and positively associated with both the Return on Equity and Operational Self-Sufficiency of MFIs, indicating a positive impact of gender diversity on firms’ performance.