Social and Financial Performance of Microfinance Institutions: A Multi-stage Data Envelopment Analysis Application

Nzongang, Joseph; Nishimikijimana, Eloge

doi:10.1057/9781137034915_8

Cited by 3 publications

(3 citation statements)

References 12 publications

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“…The benefit of using the CCR model over the BCC model is that CCR scores and BCC scores are linked by the relation CCR = BCC × SE (scale efficiency) (Nzongang and Nishimikijimana, 2013). Our analysis computes the DEA scores using the “multi-stage” approach.…”

Section: Discussionmentioning

confidence: 99%

Financial inclusion and the performance of microfinance institutions: does social performance affect the efficiency of microfinance institutions?

Bharti

Malik

2021

SRJ

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Purpose The purpose of this study is to evaluate whether focus on social output affects the efficiency of MFIs. Inclusive growth is the key developmental aim for many developing countries, including India. The role of microfinance institutions (MFIs) in promoting financial inclusion is widely applauded. However, to achieve financial sustainability, MFIs have become highly commercialised and are seen to have drifted away from their social mission. Various studies have shown the efficiency of MFIs on financial parameters. MFIs being a social enterprise, it is important to include social output among the efficiency parameters. Design/methodology/approach This study attempts to compare the efficiency of MFIs with and without social performances across the various size of MFIs based on their asset, i.e. large, medium and small. This study uses Data Envelopment Analysis (DEA) for assessing an MFI’s efficiency. For calculating the social output score, the Gutman Scale is used. Efficiency is calculated with and without social output, and the resulting scores are compared to assess the impact of social performance on the efficiency of MFIs. Findings The results of this study allow us to conclude that with the inclusion of social output, the efficiency of MFIs improves across various categories. In terms of social performances, it is concluded that MFIs are targeting women and mostly working in rural areas but have neglected issues like health and education. Originality/value The findings of this study will help MFIs in formulating their mission and vision statements and in achieving the objective of financial inclusion without experiencing mission drift.

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Section: Discussionmentioning

confidence: 99%

Financial inclusion and the performance of microfinance institutions: does social performance affect the efficiency of microfinance institutions?

Bharti

Malik

2021

SRJ

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“…MFIs have double bottom-line objectives of outreach and financial sustainability, and both are crucial. Very few studies (Kaur, 2016;Lebovics, Hermes, & Hudon, 2016;Nzongang & Nishimikijimana, 2013;Widiarto & Emrouznejad, 2015) address this issue. Location-wise efficiency differs, so it is not required to do a cross-country analysis as observed by Balkenhol (2007).…”

Section: Efficiency Studies In Indian Contextmentioning

confidence: 99%

Social and Financial Efficiency: A Study of Indian Microfinance Institutions

Chauhan¹

2020

IIM Kozhikode Society & Management Review

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Microfinance institutions (MFIs) provides savings, credit, insurance and remittance facilities to more impoverished people without any collateral. MFIs have twin goals: social outreach and financial sustainability. Outreach refers to how many people are served by MFIs while the capacity of MFIs to serve longer is financial sustainability. The social and financial performance of MFIs is the most debatable issue in the Indian microfinance industry. Social efficiency indicates MFIs’ willingness to support a higher number of poorer consumers while financial efficiency indicates how long financial services can be offered to the poor by institutions. The success of these organizations is very critical for the continuity of funding support for donor agencies and the government. Using data envelopment analysis (DEA) techniques this paper calculates the efficiency of Indian NGO–MFIs. The research also uses Tobit regression to estimate the factors of the efficiency of MFIs. The data is taken from the Microfinance Information Exchange for the period 2009 to 2015. Results indicate that NGO–MFIs are financially more efficient than social ones. Regression findings show that the critical variable for the financial and social efficiency of NGO–MFIs is operational self-sufficiency (OSS). Very few empirical studies are available in the Indian context that discuss the efficiency of Indian NGO–MFIs. The present paper provides standards for performance measures of NGO–MFIs operating in India to assist in improving the performance and growth of microfinance firms.

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“…The establishment of a banking and financial industry has been hampered by a series of linked constraints that have functioned as the primary promoters of microfinance demand. The framework and character of Kenya's banking and finance industry; an absence of guidelines and control essential for changes in banking and finance; and profit-driven banking organizations' traditional commercial activities are only a few of these restrictions (Nzongang & Nishimikijimana, 2013).…”

Section: Introductionmentioning

confidence: 99%

Strategic positioning and is it a useful construct in improving performance of microfinance institutions in Kenya

Kapukha,

Makau

2023

IJRBS

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This paper aims to examine the effect of strategic leadership, resource allocation, information technology, customer focus, and differentiation on the performance of microfinance institutions in Nairobi City County. The study was founded on a resource-based view, dynamic capability and life-cycle theories. A target of 300 employees was targeted from which a sample of 172 research participants was recruited. The sample was selected through a combination of both stratified and sampling techniques. Questionnaires were used for primary data collection. Analysis used both descriptive and multiple regression analyses. The findings of the study indicated the urgency for microfinance organizations to adopt growth strategies that encompass innovative digital advancements, the introduction of novel products, innovation-focused strategies, and the digitization of services. The findings further highlighted the pivotal roles played by strategic positioning, strategic leadership, information technology integration, and differentiation in significantly shaping microfinance institutions’ performance. The findings also indicated that a unit enhancement of strategic positioning indicator had a significant enhancement on their individual performance. However, the effect of customer focus and resource allocation did not exhibit the same level of significance. The study recommended the reinforcement of strategic positioning, optimized resource allocation, embracing technological integration, and an unwavering focus on customer needs. The study recommended the exploration of diverse leadership styles, resource allocation strategies, and the undertaking of comparative analyses to draw insights into the effects of these factors on microfinance institutions.

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Social and Financial Performance of Microfinance Institutions: A Multi-stage Data Envelopment Analysis Application

Cited by 3 publications

References 12 publications

Financial inclusion and the performance of microfinance institutions: does social performance affect the efficiency of microfinance institutions?

Financial inclusion and the performance of microfinance institutions: does social performance affect the efficiency of microfinance institutions?

Social and Financial Efficiency: A Study of Indian Microfinance Institutions

Strategic positioning and is it a useful construct in improving performance of microfinance institutions in Kenya

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