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Efficiency of Microfinance Institutions: A Data Envelopment Analysis

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Abstract

This study examines the cost efficiency of 39 microfinance institutions across Africa, Asia and the Latin America using non-parametric data envelopment analysis. Our findings show non-governmental microfinance institutions particularly; under production approach, are the most efficient and this result is consistent with their fulfillment of dual objectives: alleviating poverty and simultaneously achieving financial sustainability. However, bank-microfinance institutions also outperform in the measure of efficiency under intermediation approach. This result reflects that banks are the financial intermediaries and have access to local capital market. It may be possible that bank-microfinance institutions may outperform the non-governmental microfinance institutions in the long run.

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Authors and Affiliations

  1. University of Queensland Business School, The University of Queensland, St. Lucia, QLD, 4072, Australia

    Mamiza Haq

  2. RMIT University, Victoria, Australia

    Mamiza Haq

  3. Department of Accounting and Finance, Monash University, PO Box 197, Caulfield East, Victoria, 3145, Australia

    Michael Skully

  4. Faculty of Business, Technologyand Sustainable Development, Bond University, Robina, Gold Coast, QLD, 4229, Australia

    Shams Pathan

Authors
  1. Mamiza Haq
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  2. Michael Skully
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  3. Shams Pathan
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Correspondence to Mamiza Haq.

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Haq, M., Skully, M. & Pathan, S. Efficiency of Microfinance Institutions: A Data Envelopment Analysis. Asia-Pac Financ Markets 17, 63–97 (2010). https://doi.org/10.1007/s10690-009-9103-7

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  • DOI: https://doi.org/10.1007/s10690-009-9103-7

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