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Efficiency of Microfinance Institutions: A Data Envelopment Analysis

39 Pages Posted: 16 May 2009 Last revised: 4 Jan 2014

Mamiza Haq

University of Queensland - Finance; Financial Research Network (FIRN)

Michael T. Skully

Monash University - Department of Banking and Finance; Financial Research Network (FIRN)

Shams Pathan

University of Queensland - Business School; The University of Queensland

Date Written: September 30, 2009

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.

Keywords: Africa, Asia, Data Envelopment Analysis, Efficiency, Latin America, Microfinance institutions

JEL Classification: G21, H21

Suggested Citation

Haq, Mamiza and Skully, Michael T. and Pathan, Shams, Efficiency of Microfinance Institutions: A Data Envelopment Analysis (September 30, 2009). Asia-Pacific Financial Markets, Forthcoming. Available at SSRN: https://ssrn.com/abstract=1405709

Mamiza Haq (Contact Author)

University of Queensland - Finance ( email )

Australia

Financial Research Network (FIRN) ( email )

C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia

Michael T. Skully

Monash University - Department of Banking and Finance ( email )

900 Dandenong Road
Caulfield East, Victoria 3145
Australia
+61 3 9903 2407 (Phone)
+61 3 9903 1443 (Fax)

Financial Research Network (FIRN)

C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia

HOME PAGE: http://www.firn.org.au

Shams Pathan

University of Queensland - Business School ( email )

The University of Queensland
Brisbane, Queensland 4072
Australia
61 7 3346 8075 (Phone)
61 7 3346 8166 (Fax)

HOME PAGE: http://www.business.uq.edu.au/staff/details/shams-pathan

The University of Queensland ( email )

C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Brisbane, 4072
Australia

HOME PAGE: http://www.business.uq.edu.au/staff/staff_details?name=spathan&action=show_all

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