Outreach and Efficiency of Microfinance Institutions

Abstract

This paper uses stochastic frontier analysis (SFA) to examine whether there is a trade-off between outreach to the poor and efficiency of microfinance institutions (MFIs). Using a sample of more than 1,300 observations, our study suggests that outreach and efficiency of MFIs are indeed negatively correlated.

Keywords: microfinance, outreach, efficiency, stochastic frontier analysis

JEL Classification: G21, O16, I39, C49