Managing microfinance institute performance: turning environmental risk into opportunity through governance

This study extends the literature on management of microfinance institute by exploring the moderating effect of governance quality as measured by Political Stability (PS) and Voice and Accountability (VA) on the dynamics between environment and finance in the context of microfinance institutes (MFIs) in selected ASEAN countries from 2013 to 2022. Data Envelopment Analysis was used to determine financial efficiency. Then, multiple panel regression was employed to examine the correlations and moderating effects. The findings showed that CO2 emissions have a significantly adverse effect on the financial efficiency of MFIs. Besides, VA has a statistically significant relationship in moderating the relationship, whereas PS did not show any significant moderating impact. The findings are beneficial for MFIs, policymakers, and researchers when forming a strategy to raise financial efficiency and also take into consideration environmental issues, as this study provides important governance factors for firms.

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