Asian Journal of Economics, Finance and Management

Microfinance institutions in Kenya undertake a pivotal function in addressing numerous financial needs arising from the unbanked population. They provide credit facilities at a low cost to support start-up businesses and maximise welfare. The board structure's impact on performance based on profitability in Kenyan microfinance banks is crucial to understand. Worldwide, no firm, be it financial or non-financial, can exist without the coordinating role of board members of the organisation. This is critical to ensuring efficient and effective use of resources for the attainment of organisational objectives. Factors such as board independence and gender can affect the overall profitability of these institutions. The study aims to structure of the board and the profitability of microfinance banks in Kenya. This study utilised secondary panel data from 2015 to 2022. Findings revealed that the independence of boards affects profitability insignificantly and negatively. Microfinance banks should focus on other governance attributes that may possess a more pronounced influence on financial performance. Board gender significantly affected profitability negatively. The study recommends that these institutions actively pursue gender diversity in their board composition. By increasing the representation of women on boards, microfinance banks can leverage diverse perspectives and decision-making styles, which may enhance strategic planning and financial performance. Board age negatively affected profitability. Microfinance banks should prioritise improving board effectiveness through the recruitment of members with diverse skills and experiences, fostering a culture of active participation, and ensuring robust strategic oversight. This signifies that the board of directors can influence the profitability of these institutions. Larger boards may bring diverse perspectives, skills, and resources that contribute to improved decision-making and strategic planning.