Microfinance institutions and efficiency

Nieto, Begoña Gutiérrez; Serrano‐Cinca, Carlos; Molinero, Cecilio Mar

doi:10.1016/j.omega.2005.04.001

Cited by 258 publications

(173 citation statements)

References 42 publications

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“…This study highlights an important aspect that, "how DEA model be specified i.e. which input and output variables should be chosen [12]. A methodological approach based on multivariate analyses is applied in order to choose appropriate model specifications and to produce ranking of MFIs in terms of efficiency.…”

Section: To Analyze the Effect Of Increasing Interest Rates On Financialmentioning

confidence: 99%

Determinants of Financial Self Sufficiency of Andhra Pradesh Microfinance Institutions

Beg¹

2016

J Bus Fin Aff

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Schafer and Fukasawa in this paper titled "Factors determining operational self sufficiency among Microfinance institutions" investigate about the factors affecting operational self sufficiency of MFIs [4]. The empirical investigation is based on the data of 1,000 MFIs retrieved from MIX market for the year 2006 and 2008 scattered in different part of the world. Their empirical findings by multiple regression analysis revealed that number of borrowers, write off ratio were found to be important determinants of operational self sufficiency. Moreover, there was no significant difference in 2006 before the worldwide financial crisis and in 2008.Zerai and Rani examined technical efficiency of Ethiopian micro finance institution (MFIs) by utilizing data of 19 micro finance institutions taken from mix market with the help of stochastic frontier analysis [5]. The findings of the study revealed that average efficiency score of 71.72% of Ethiopian MFIs. Assets, operational sustainability, depth of outreach have significant impact on efficiency. The empirical findings confirm tradeoff between efficiency and outreach of Ethiopian MFIs.Cull, Demirgüc-Kunt and Morduch examines by using dataset of 245 microfinance Institution effect of prudential supervision on MFI profitably outreach to small scale borrowers and women [6]. Their finding suggest that profit oriented micro finance institution respond to supervision by maintaining profit rates and but at the cost outreach to women and poor client that are costly to reach. Their empirical finding shows that supervision has a negative effect on outreach, because supervision is positively related with average loan balance while it is negatively related with the percentage of women borrowers. Keywords: Financial sustainability; Microfinance institutions; Microfinance crisis Introduction and IssuesMicrofinance institutions (MFIs) have proved to be very important in growth and development of a country. MFIs enhance financial deepening in an economy thereby contributing to an economy's development by providing financial services to the extremely poor section of society. Nowadays, MFIs face challenge of sustainability and outreach. There has been increased pressure on MFIs to decrease dependence on donations, grants and subsidized funding. As providing Microfinance services is a costly business due to high transaction and information cost. At presents, large number of Microfinance programs is still depending on donors, grants and donations which mean that MFIs are not financially sustainable. In 1990s, the issue of sustainability of MFIs gave rise to important debate between financial system approach and poverty lending approach (Robinson, 2001) [1].According to the report of Deutsche bank (2007) only 1-2% of MFIs in the world are financially sustainable [2]. 8% of all MFIs are close to being profitable. 70% of all MFIs are heavily dependent on subsidy. Microfinance in India has grown at tremendous pace in recent years, achieving significant outreach amongst the poor household across t...

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Section: To Analyze the Effect Of Increasing Interest Rates On Financialmentioning

confidence: 99%

Determinants of Financial Self Sufficiency of Andhra Pradesh Microfinance Institutions

Beg¹

2016

J Bus Fin Aff

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“…Moreover, cost functions are more appropriate than profit functions because MFIs are price takers on the input market, and have some monopoly on the output market for marginal clients (Varian 1984). Estimation methods include data envelopment analysis (Paxton 2007;Gutierres-Nieto et al 2007), stochastic frontier analysis (Hartarska and Mersland 2012;Hermes et al 2011), or mixture modeling (Caudill et al 2009). …”

Section: Summary Of the Relevant Literaturementioning

confidence: 99%

Should all microfinance institutions mobilize microsavings? Evidence from economies of scope

et al. 2014

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We extend a recently developed generalized local polynomial estimator into a semiparametric smooth coefficient framework to estimate a generalized cost function. The advantage of the generalized local polynomial approach is that we can simultaneously choose the degree of polynomial for each continuous nonparametric regressor and the bandwidths via data-driven methods. We provide estimates of scope economies from the joint production of microloans and microdeposits for a dataset of Microfinance Institutions from over 50 countries. Our approach allows analysis on all Microfinance Institutions rather than only those offering just microloans. Moreover, the smooth coefficient estimator provides a general interface in which to account for both direct and indirect environmental factors. We find substantial scope economies in general, of about 10 % at the median, as well as evidence that economies of scope

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“…In this paper we extend the use of DEA to MFI performance assessment. We will, in particular, extend a previous ly published DEA model designed to assess MFI efficiency so that it can deal with both social and financial performance; Gutiérrez-Nieto et al (2006).…”

Section: Introductionmentioning

confidence: 99%

Social efficiency in microfinance institutions

Nieto

Serrano‐Cinca

Molinero

2009

Journal of the Operational Research Society

208

174

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Microfinance Institutions (MFIs) are a special case in the financial world. They have a double financial and social role and need to be efficient at both. In this paper we try to measure the efficiency of MFIs in relation to financial and social outputs using Data Envelopment Analysis. For the analysis of financial efficiency we rely on existing literature for traditional financial institutions. To this we have added two indicators of social performance: impact on women, and a poverty reach index. A series of hypotheses on MFIs have been entertained, that concern the relationship between social and financial efficiency, and the relationship between efficiency and other indicators, such as profitability. Other aspects studied are the relation between social efficiency and type of institution -Non-Governmental Organisation (NGO), non-NGO-, and the importance of geographical region of activity. The results reveal the importance of social efficiency assessment. JEL Classification: G290

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Microfinance institutions and efficiency

Cited by 258 publications

References 42 publications

Determinants of Financial Self Sufficiency of Andhra Pradesh Microfinance Institutions

Determinants of Financial Self Sufficiency of Andhra Pradesh Microfinance Institutions

Should all microfinance institutions mobilize microsavings? Evidence from economies of scope

Social efficiency in microfinance institutions

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