ABSTRACT
This chapter addresses the issues surrounding the objective of microfinance economic sustainability and ability to reach its goals. Corporate governance plays a fundamental role in an institution's economic effectiveness and 'double-bottom line' balance, both under the legal form adopted and management rules perspectives. Microfinance institutions (MFIs) self-sufficiency is often assessed through the operational self-sufficiency ratio (OSS) which measures the extent to which operating revenues cover operating costs. Corporate governance becomes fundamental for ensuring social mission along with financial sustainability. European banking law does not require any specific legal form for credit institutions, national regulators tend to require a for-profit and limited company form to provide financial services, especially in the case of banking activity. Public funding in the forms of grants, concessional loans, equity and guarantees is still particularly important in Western Europe, where banks participation in the sector is still limited and in the framework of their corporate social responsibility (CSR) activities.
