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Human Capital Instability and the Sustainability of Microfinance Institutions: Asymmetric Evidence From Africa
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DOI：10.1002/sd.71546.png)
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Abstract
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Staff turnover is a critical yet underexplored source of institutional vulnerability in African microfinance, threatening the sustainability of financial inclusion and the achievement of SDG 1 (No Poverty) and SDG 8 (Decent Work and Economic Growth). Grounded in relationship lending and human capital theories, this study examines the heterogeneous effects of turnover on credit risk and operational self-sufficiency among MFIs across 30 African countries (2010–2018). Using quantile regression with year fixed effects on an unbalanced panel of 222–238 MFIs, we document that turnover effects on credit risk are asymmetric—with upper-tail coefficients nearly eight times larger than those at the lower tail—while impacts on operational self-sufficiency are most pronounced among high-performing institutions at the upper quantile. Strikingly, these adverse effects are confined to for-profit MFIs, suggesting unique structural resilience in non-profit models. Results are robust to alternative credit risk measures, lagged turnover specifications, and the inclusion of macroeconomic and governance controls. These findings highlight human capital stability as a prerequisite for SDG 1 (No Poverty) and SDG 8 (Decent Work). We argue that staff retention is a frontline sustainability instrument, requiring mandatory disclosure and integrated risk management to safeguard the financial health of marginalized communities.
Keywords:
Africa
credit risk
microfinance institutions
operational self-sufficiency
staff turnover
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