Social and Financial Efficiency of Microfinance Institutions

Carlos Serrano-Cinca (), Begoña Gutiérrez-Nieto and Cecilio Mar Molinero
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Cecilio Mar Molinero: University of Kent, France

Chapter 19 in The Handbook of Microfinance, 2011, pp 397-418 from World Scientific Publishing Co. Pte. Ltd.

Abstract: AbstractThe performance of Microfinance Institutions (MFIs) is examined in this paper. MFIs have a double aspect: financial and not-for-profit. It is, therefore, appropriate to assess their performance by means, not only of financial ratios, but also by means of social indicators. We propose the use of Data Envelopment Analysis (DEA) as a way of assessing the relative efficiency with which an institution uses inputs in order to generate outputs. The outputs can be either financial or social. We also study the relationship between financial and social efficiency, and between these and other indicators. We have used Principal Components Analysis, Cluster Analysis, and Multivariate Regression as analysis tools. The results show that it is possible to explain the performance of a MFI by means of a reduced set of variables. The paper ends by discussing the need to extend the use of social efficiency indicators, as we consider that they are appropriate in the assessment of the performance of MFIs.

Keywords: Microfinance; Poverty; Microcredit; Informal Markets; Microsavings; Microinsurance; Social Responsibility; Randomized Impact Evaluations; Ethics; Gender; South Asia; Latin America; Africa (search for similar items in EconPapers)
Date: 2011
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