Abstract:
The objective of the present study is to empirically test the validity of the critical mass
hypothesis (Kanter, 1977a, 1977b) using data from the microfinance sector. A sample of ninety
five microfinance institutions from Bangladesh is used in the present study. While majority of
the clients in the microfinance sector are women it is known to have lack of women
representation in the governing boards, both general and executive. The results reported in this
study show convincing evidence that the predictions of the critical mass hypothesis hold up in
the microfinance sector. The policy implication of this finding is to alert the regulators to focus
on women representation in the governing boards - and possibly, mandate MFIs to have a critical
mass of women in the governing boards instead of requiring some arbitrary number, as prevalent
in many countries.
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