Corporate Governance Research in Microfinance Institutions: A Systematic Literature Review

Abstract

This study aims to systematically review the literature on corporate governance (CG) in Microfinance Institutions (MFls). Specifically, this study identifies how CG is defined and operationalized, examines its role in improving transparency and accountability, and maps the antecedents, mechanisms, challenges, and consequences of CG in the context of the dual mission of MFls. This study uses the Systematic Literature Review (SLR) method following the PRISMA guidelines. English articles from the Scopus database were selected based on specified keywords. After eliminating duplicate, irrelevant, and inaccessible articles, 50 articles were analyzed using content analysis to identify patterns of concepts and empirical findings related to MFI governance. The review results show that CG in MFIs has unique characteristics due to its dual objectives: financial sustainability and social outreach. CG mechanisms such as board independence, gender diversity, audit quality, and board committees play a positive role in improving financial and social performance. The main challenges include conflicts of interest, founder dominance, information asymmetry, institutional voids, and the risk of mission drift. The effectiveness of CG is greatly influenced by law, culture, ownership structure, and institutional conditions. This study is limited to English-language articles in the Scopus database. Future research needs to expand the scope of cross-country data, use stronger econometric methods to address endogeneity, and explore the internal dynamics of boards through a qualitative approach. The results confirm that strengthening governance is necessary for regulators, donors, and MFI management to improve transparency, reduce risk, and ensure the long-term sustainability of institutions. This study is the first SLR to focus specifically on CG in MFIs. It consolidates scattered findings, develops an integrative CG framework, and provides directions for future research.