Corporate governance practices and financial sustainability of pride microfinance in Uganda.

Abstract

This study aimed at determining the impact of corporate governance practices on financial sustainability of micro finance institutions in Uganda with the study objectives; To assess the effect of board transparency on financial sustainability of pride microfinance in Uganda, to examine the impact of Board accountability on financial sustainability of pride microfinance in Uganda. To find out the influence of board composition on financial sustainability of pride microfinance in Uganda the study was anchored on the agency theory that was postulated by Alchain and Demsetz in 1972 and was further developed by (Jensen & Meckling, 1976). In addition to that, the study applied a cross sectional research design and quantitative approach. The study had a target population of 35 employees across all the branches of pride micro finance and collected data from a sample size of 32 respondents as guided by Krejcie and Morgan (1970). Data was collected using close ended questionnaires. Furthermore, data analysis was done using statistical package for social sciences (SPSS) version 20 from which frequency tables, descriptive statistics, reliability, validity, correlation and regression results were obtained. The study findings showed that board transparency (Adj R 2 = 0.681, p< 0.01), board composition (Adj R 2 = 0.741, p< 0.01) and board accountability (Adj R 2 = 0.124, p< 0.01) have a positive and significant effect on financial sustainability. Based on the findings of the study, the researcher therefore concludes that board transparency, board composition and board accountability acts tools for improving financial sustainability. The study also concludes that quarterly audit reports should be routinely done to boost on the financial sustainability of pride micro finance. The study therefore, recommends that micro finance institutions should transparency of board members, composite the gender of members and practice routine audits in order to improve on the financial sustainability of micro finance institutions in Uganda.