Efficiency of Microfinance Institutions: A Data Envelopment Analysis
University of Queensland - Finance; Financial Research Network (FIRN)
Michael T. Skully
Monash University - Department of Accounting and Finance; Financial Research Network (FIRN)
University of Queensland - Business School; The University of Queensland
September 30, 2009
Asia-Pacific Financial Markets, Forthcoming
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.
Number of Pages in PDF File: 39
Keywords: Africa, Asia, Data Envelopment Analysis, Efficiency, Latin America, Microfinance institutions
JEL Classification: G21, H21Accepted Paper Series
Date posted: May 16, 2009 ; Last revised: October 2, 2009
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