Are Financial and Social Efficiency Mutually Exclusive? A Case Study of Vietnamese Microfinance Institutions

Lebovics, Maxime; Hermes, Niels; Hudon, Marek

doi:10.1111/apce.12085

Cited by 78 publications

(87 citation statements)

References 46 publications

(53 reference statements)

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“…Lebovics et al . () conclude that subsidies allow Vietnamese MFIs increasing their social efficiency. Forcella and Hudon () find that MFIs with better environmental performance also benefit from more donor interest.…”

Section: Discussionmentioning

confidence: 97%

“…Lebovics et al . () explain that subsidies help MFIs to achieve high financial efficiency in Vietnam. This result is corroborated in a study by Tahir and Che Tarim () on the efficiency of Vietnamese MFIs.…”

Section: Discussionmentioning

confidence: 99%

“…Other papers derive opposite conclusions and show that there is a positive relationship between obtaining subsidies and financial performance. Lebovics et al (2016) explain that subsidies help MFIs to achieve high financial efficiency in Vietnam. This result is corroborated in a study by Tahir and Che Tarim (2013) on the efficiency of Vietnamese MFIs.…”

Section: Mfi Performance and Financing Sourcesmentioning

confidence: 99%

See 2 more Smart Citations

Determinants of the Performance of Microfinance Institutions: A Systematic Review

Hermes

Hudon

2018

Journal of Economic Surveys

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106

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Microfinance institutions (MFIs) generally aim at improving the access of the poor to financial services while at the same time being financially sustainable. But what do we know about how MFIs reach and combine these two goals? We carry out a systematic review of close to 170 papers discussing the determinants of the financial and social performance of MFIs. The review shows that the most important determinants addressed in the literature are MFI characteristics (size, age and type of organization), their funding sources, the quality of organizational governance and the MFIs’ external context such as macro‐economic, institutional and political conditions. The evidence on these issues is rather mixed. Moreover, the direction of the relationship between these drivers and MFI performance depends on the context, particularly the country‐specific context. Finally, there is a lack of consensus in the literature on the measurement of financial and social performance. Due to the complexity of the concept, we argue that social performance should only be assessed by using a multidimensional perspective. This can be done either by applying recent and holistic social performance measures such as the SPI4, or at least by using a combination of proxies, such as outreach, gender and rural measures.

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Section: Discussionmentioning

confidence: 97%

Section: Discussionmentioning

confidence: 99%

Section: Mfi Performance and Financing Sourcesmentioning

confidence: 99%

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Determinants of the Performance of Microfinance Institutions: A Systematic Review

Hermes

Hudon

2018

Journal of Economic Surveys

Self Cite

106

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“…Fifty‐nine per cent of the MFIs were NPOs, illustrating the important influence of nonprofit firms in the microfinance industry (Lebovics et al. ). At the same time, 41 per cent were FPOs, which provided a relatively well‐balanced setting for testing the differences between NPOs and FPOs.…”

Section: Data and Summary Statisticsmentioning

confidence: 99%

Board Governance: Does Ownership Matter?

Dato

Hudon²,

Mersland

2019

Ann Public Coop Econ

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Good governance is crucial to achieving an organization's mission. Nevertheless, little is known about how the structure of governance is influenced by the nonprofit (NPO) or for‐profit ownership (FPO) structure of an organization, partly because they tend to be active in different sectors. In this paper we overcome this challenge by using data from a global sample of 392 microfinance institutions. The results show that the average NPO has a larger board, more female directors, and a higher number of board meetings than the average FPO. Moreover, where there are larger boards and more frequent board meetings, this has a positive effect on the financial performance of NPOs. It is thus confirmed that ownership structures influence boards’ characteristics and that some board mechanisms are more efficient in some ownership structures than in others. An effective board design should thus be based on a firm's ownership structure.

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“…The main source of inefficiency, including overall, financial and social, is technical inefficiency. When it comes to the question of whether financial and social efficiency are mutually exclusive, Lebovics et al (2016) found in 28 Vietnamese MFIs for the year 2011 that there was no correlation between those two types of efficiencies, meaning that there is no tradeoff between them. They stress that where financial efficiency is concerned, learning effects and cost-efficiency seem to be crucial, whereas for social efficiency the quality of staff and the quality of leadership of the top managers appears to be of the most importance.…”

Section: The "Two Dimensional" Efficiency Of Microfinance Institutionsmentioning

confidence: 99%

The social and financial efficiency of microfinance institutions: the case of Bosnia and Herzegovina

Efendic

Hadziahmetovic

2017

South East European Journal of Economics and Business

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This paper investigates the financial and social efficiency of microfinance institutions (“MFIs”) in Bosnia and Herzegovina, as well as the effects of the latest crisis on these “two-dimensional” efficiencies. Specifically, we analyze the efficiency of MFIs in Bosnia and Herzegovina (BiH) as a good case of a European, post-war country in transition with a developed micro-financial sector. The efficiency analysis relies on secondary data collected and investigated through Data Envelopment Analysis (DEA). The study covers data for the period commencing in 2008 and ending in 2015. In our empirical investigation, we find a suboptimal level of both financial and social efficiency among MFIs in BiH. However, financial efficiency is significantly higher than social efficiency, while small-sized MFIs over perform larger ones in both the financial and social dimensions. As a result of the crisis, MFIs recorded a declining trend in efficiency up to 2010, after which they began to show signs of slow recovery. However, our results suggest that MFIs prioritized financial over social goals in recovery period following the crisis.

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Are Financial and Social Efficiency Mutually Exclusive? A Case Study of Vietnamese Microfinance Institutions

Cited by 78 publications

References 46 publications

Determinants of the Performance of Microfinance Institutions: A Systematic Review

Determinants of the Performance of Microfinance Institutions: A Systematic Review

Board Governance: Does Ownership Matter?

The social and financial efficiency of microfinance institutions: the case of Bosnia and Herzegovina

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