This study presents the evidence on the relationship between economic governance and the dual objectives of microfinance institutions; poverty reduction and self sustainability using a balanced panel on 207 MFI from South Asia and South East Asia and Pacific. The study has analyzed the impact of internal and external governance on the performance of microfinance institutions during 2004-2011. The results show that internal governance is better placed for addressing the sustainability aspect of MFI while external governance can explain the outreach dimension. Moreover, regulations tend to make MFI more operationally self sustainable but not helps the outreach. Similarly, product diversification is favorable for the sustainability but the evidence suggests that the product innovation has not been helpful in reaching more people that are unbankable. Voice and accountability, contract enforcement procedures and credit information have positive effects on the depth of outreach. Supervisor:-Dr.Attiya Yasmin Javid