Effect of Board Characteristics on Financial Performance of Microfinance Banks in Kenya

Abstract

The board of directors plays the monitoring function as advocated for by the agency theory and providing resources as supported by the resource dependence theory. However, despite such efforts, corporate failures have been continuously seen in both created and creating nations with the revealed instances of the fall of Enron in 2001 andWorld.Com in 2002, which are credited to the poor administration rehearses by the top managerial staff. The main objective of this study was to examine the effect of board characteristics on financial performance of microfinance banks in Kenya. This investigation tried to look at the impact of board attributes on money related execution of microfinance banks in Kenya. The investigation embraced an expressive research structure and the number of inhabitants in the examination was made of the 13 of microfinance banks in Kenya. The investigation altogether utilized auxiliary information, which was gathered utilizing an information accumulation sheet of the microfinance banks in Kenya for a time of 5 years from 2013 to 2017 and connection and relapse examination was utilized to dissect the gathered information. The examination found a positive and immaterial connection between board autonomy and budgetary execution and a negative and irrelevant connection between board estimate and money related execution. The investigation additionally settled a negative and critical connection between board sex, board nationality and monetary execution. The outcomes at last settled that bank estimate had a positive and factually noteworthy association with money related execution of microfinance banks in Kenya. The investigation presumed that board sex assorted variety; board nationality and bank estimate essentially impacts money related execution of microfinance banks in Kenya. The outcomes uncovered a positive and immaterial connection between board autonomy and money related execution of microfinance banks in Kenya. The investigation in this manner suggests that the administration of microfinance banks ought to put resources into advantages for guarantee that they appreciate the advantages of economies of scale related with size Future researchers can carry out an investigation on the connection between board attributes and different sorts of microfinance organizations.