Community Development Financial Institutions: Issues of Performance and Governance

(Preliminary Version; please do not cite without permission) CDFI serve an important social function because by providing access to financial services to underserved low-income individuals and families. Understanding what governance mechanisms promote efficient use of scarce resources that these organizations possess matters because only sustainable institutions have the potential to revitalize low-income communities and change low-income individuals ’ lives in the long-term. The focus of this paper is on evaluating the impact of board size and composition on the performance of CDFIs. The results show that CDFIs with larger boards have better outreach, while diverse boards may not be best able to guarantee that CDFIs will achieve their stated objectives