Influence of Environmental and Governance Factors on Sustainability of Microfinance Institutions in Ghana

Abstract

This study examines the environmental and governance factors and how they affect sustainability of Microfinance institutions (MFIs) in Ghana. Microfinance institutions like any other system are affected by peculiar environmental and governance factors which determine to a large extent how it survives. The study therefore measures seven variables by testing seven hypotheses from a survey data of 114 MFIs in Ghana. The study revealed that even though there was a positive and significant relationship between sustainability and improved regulatory framework, loan recovery, quality of staff and the MFIs ability to create jobs for their clients, existence of Board of Directors, and increased competition, do not impact on sustainability. Recommendations on how to enhance the environmental and governance factors to ensure sustainability of MFIs have been made.

Key words: sustainability, environment, governance, microfinance