Financial and Social Efficiencies of Microfinance Institutions: A Malmquist Productivity Index (MPI) Approach

Lâma Daher and Erwan Le Saout

Chapter 4 in Corporate Social Responsibility, Ethics and Sustainable Prosperity, 2019, pp 101-126 from World Scientific Publishing Co. Pte. Ltd.

Abstract: The goal of this chapter is to analyze the effect of the recent global financial crisis on the efficiency of microfinance institutions (MFIs). The double-bottom line of MFIs is considered through the assessment of two distinct efficiency indices. On the one hand, the financial efficiency measures the financial revenues compared to the costs disbursed to generate them. On the other hand, the social efficiency measures the social outreach compared to the costs deployed to provide microfinance services to the poor. The study employs the DEA-based Malmquist Productivity Index methodology to assess the change in efficiency between two time periods. Using a dataset composed of 362 MFIs between 2005 and 2011, the results suggest a decline in both dimensions of efficiency during the crisis. The deterioration was the most marked for commercial MFIs that are closely connected to developed financial markets. The sources of deterioration were mainly related to regression in management practices rather than scale.

Keywords: Corporate Social Responsibility; Ethics; Sustainable Prosperity; Corporate Decision Making; Corporate Social Performance; Fraud; Microfinance Institutions; Financial Institutions; Environmental Performance; Corporate Governance; Value Creation; Circular Economy; Asian Infrastructure Investment Bank; Green Finance; Sustainable Value Money; Turkish Banking Sector; Lending Decisions (search for similar items in EconPapers)
JEL-codes: G3 M14 (search for similar items in EconPapers)
Date: 2019
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