Performance of Listed Microfinance Institutions

Daher, Lâma; Saout, Erwan Le

doi:10.1002/jsc.2117

Cited by 5 publications

(7 citation statements)

References 18 publications

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“…The microfinance empowers the women and poor and helps them in building financial assets and reduces the economic vulnerability. Besides, the MFIs specifically focus on promoting self-employment and entrepreneurship activities (Hartarska, 2005;Daher and Le Saout, 2017). In addition, the United Nations has declared the year 2005 as "The International Year of Microfinance", to recognise the importance of microfinance.…”

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confidence: 99%

Drivers of financial and operational efficiency of MFIs: empirical evidences from Eastern Europe and Central Asia

Khan

Shireen²

2020

BIJ

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PurposeThe study attempts to examine the bias-adjusted financial and operational efficiency estimates of microfinance institutions (MFIs) operating in the Eastern Europe and Central Asia (ECA) region during the financial year 2017–2018. In addition, the study also identifies the responsible factors determining the financial and operational performances of MFIs operating in the ECA region.Design/methodology/approachThe study employs two-stage bootstrap data envelopment analysis (DEA). In the first stage, the authors incorporate the bootstrap procedure in the DEA framework as suggested by Simar and Wilson (2000) to estimate the bias-corrected efficiency scores of 67 sample MFIs. In order to identify the drivers of efficiency level, the study deploys the bootstrap truncated regression model following the Simar and Wilson (2007) guidelines in the second stage of analysis.FindingsThe authors note from the empirical results that MFIs operating in the ECA region are relatively more financially efficient (0.588) than socially efficient (0.496). However, none of the MFIs were found to be operating at best-practice frontier while considering the bias-adjusted efficiency estimates. Further, the results of second stage of analysis confirm that corporate governance, that is, board size has positive and statistically significant impact on MFIs’ performances. In addition, the bad credit quality deteriorates both financial revenue and operational efficiency. Moreover, the MFIs’ size, profit status and debt-to-equity ratio were also found to be statistically significant to determine the operational and financial efficiency of MFIs in the ECA region.Practical implicationsThe study provides the robust efficiency estimates and factors responsible to determine the financial and operational efficiency of MFIs operating in the ECA region. Further, the empirical results of the study provide the inputs and further direction to the policymakers, regulators, practitioners and managers in framing the policy and optimal operating strategies for ECA MFIs industry.Originality/valueThe study extends the DEA analysis by incorporating the bootstrap procedure in DEA model to estimate the bias-adjusted efficiency scores which are more reliable and robust. In addition, bootstrap truncated regression has been applied to identify the drivers of efficiency. Moreover, in the literature there is no single study which has deployed the double bootstrap DEA framework to examine the financial and operational efficiency estimates and its drivers.

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confidence: 99%

Drivers of financial and operational efficiency of MFIs: empirical evidences from Eastern Europe and Central Asia

Khan

Shireen²

2020

BIJ

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“…In recent years, there has been no financial sacrifice to invest in microfinance. Furthermore, Daher and Le Saout (2017) observed persistent low correlation to equities and bonds. Contrary to what could portend the outcome of Briè re and Szafarz (2015), the author notes that the correlations found their low level before the crisis.…”

Section: Performance Of Microfinance In Capital Markets?mentioning

confidence: 97%

“…Briè re and Szafarz (2015) conclude that there is a reduction of the effect of MFI diversification. Daher and Le Saout (2017) highlights the contribution of microfinance investments in portfolio diversification is not significant. Their analysis is based on the classic indicators of performance measurement (Sharpe and Treynor ratios) and spanning tests.…”

Section: Performance Of Microfinance In Capital Markets?mentioning

confidence: 99%

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Performance of the Microfinance Investment Vehicles

Saout¹

2017

AEF

Self Cite

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Over the last few years, the microfinance sector has seen its transformation. Microfinance institutions seek a wide range of sources of funding, while private investors seek not only social returns but also financial returns. This new approach has led to the emergence of microfinance investment funds and initial public offerings of certain Microfinance institutions. Microfinance now seems to be seen as a new investment opportunity by global investors.Aim of this paper is to study the performance of public Microfinance Investment Vehicles. Despite a significant currency risk, we find that the integration of microfinance assets diversifies the investor's risks and improves the efficient frontier. We conclude that microfinance institutions, via investment vehicles, are likely to attract capital from socially responsible investors seeking new investment opportunities despite a sharp decline in the Sharpe ratio over the past few months.

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“…Subsidized MFIs often charge lower interest rates (Tchuigoua, Durrieu, & Kouao, 2017). Researchers also investigate if equity can help balance the stress of microfinance organizations, notably private equity (Ashta & Hudon, 2012; Hannam & Cheng, 2012), public equity (Daher & Saout, 2017), and microequity that could be both offline (Estapé‐Dubreuil, Ashta, & Hédou, 2012) or online (Kim & Moor, 2017). Online crowdequity is a segment of the broader area of crowdfunding, which itself is a way of financing entrepreneurs directly (Royal & Windsor, 2014) or indirectly through brick‐and‐mortar institutions such as Kiva in the US or Rangde in India (Ashta, Assadi, & Marakkath, 2015).…”

Section: Research Directionsmentioning

confidence: 99%

Microfinance and financial inclusion: Challenges and opportunities

Milana

Ashta

2020

Strategic Change

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Lifting the poor from poverty through financial and social inclusion is the ultimate target and raison d'etre of microfinance. As the most recent literature has recognized, microfinance institutions have economically worked well in operating microcredit, but the aim of raising the living standard of their indigent clients has not been generally met. The expected encouragement of entrepreneurship from microcredit is still not detected in the empirical data, let alone women's social integration in working activities. The articles collected in this thematic issue bring new empirical elements of discussion pointing to many aspects of the social divides and the inequalities that plague the emerging countries. This overview article recalls the main questions that are still open and the framework of topics discussed in this thematic issue.

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Performance of Listed Microfinance Institutions

Abstract: Investment in microfinance equity may improve portfolio diversification and attract socially responsible investors.

Cited by 5 publications

References 18 publications

Drivers of financial and operational efficiency of MFIs: empirical evidences from Eastern Europe and Central Asia

Drivers of financial and operational efficiency of MFIs: empirical evidences from Eastern Europe and Central Asia

Performance of the Microfinance Investment Vehicles

Microfinance and financial inclusion: Challenges and opportunities

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