The gender (dis)advantage: assessing the impact of gender diversity on the efficiency of microfinance institutions in Africa

Purpose This study aims to investigate the impact of gender diversity on the efficiency of microfinance institutions (MFIs) in Africa through the lens of social identity theory and Tokenism theory. The analysis focuses on gender diversity at three organizational levels: the board, management and loan officer levels. Design/methodology/approach The study uses a panel data set of 70 African MFIs covering the period from 2010 to 2018. In the first stage, data envelopment analysis is used to estimate efficiency scores. In the second stage, several regression techniques, including Truncated, Tobit and Logit models, are applied to examine the impact of gender diversity alongside other control variables. In addition, a two-step system generalized method of moments estimator is used to address potential endogeneity concerns. Findings The results indicate that greater gender diversity on corporate boards is associated with lower levels of financial, social and overall efficiency. Similarly, a higher proportion of female loan officers is negatively associated with financial and overall efficiency. In contrast, the presence of female managers is positively related to social efficiency. These findings underscore the complex and heterogeneous effects of gender diversity across different organizational levels on the multiple dimensions of MFIs’ efficiency. Originality/value To the best of the authors’ knowledge, this study is among the first to investigate the relationship between gender diversity and efficiency in African MFIs across all five regions – North, West, Central, Southern and East Africa. It contributes to a deeper understanding of the multifaceted interaction between gender diversity and MFI efficiency in the African context.