Practice What You Preach: Microfinance Business Models and Operational Efficiency

J. Bos and Matteo Millone

World Development, 2015, vol. 70, issue C, 28-42

Abstract: The microfinance sector has room for pure for-profit microfinance institutions (MFIs), non-profit organizations, and “social” for-profit firms that aim to pursue a double bottom line. Depending on their business model, these institutions target different types of borrowers, change the size of their loans and adjust their loan pricing. We introduce a simple approach that accommodates a wide range of business models and allows us to estimate the operational efficiency of MFIs. Our empirical results show that MFIs with a high depth of outreach are most efficient, resulting in higher levels of outreach and profits for the same input mix.

Keywords: microfinance; output distance function; outreach; efficiency; global (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (31)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:wdevel:v:70:y:2015:i:c:p:28-42

DOI: 10.1016/j.worlddev.2014.12.018

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