A panel analysis of microfinance efficiency measures: Evidence on the effects of unobserved managerial ability

François Seck Fall, Hubert Tchakoute Tchuigoua, Anne Vanhems and Leopold Simar

No 2024020, LIDAM Discussion Papers ISBA from Université catholique de Louvain, Institute of Statistics, Biostatistics and Actuarial Sciences (ISBA)

Abstract: This study analyzes the impact of unobserved heterogeneity on microfinance efficiency. Using panel data for 168 microfinance institutions (MFIs) over the period 20102015, we examine the persistence of the effect of unobserved heterogeneity on microfinance efficiency. Using recent nonparametric and robust techniques, we identify a latent heterogeneity factor related to the ability of MFI managers to promote efficiency, independent of MFI size, and analyze its impact on MFI inefficiency measures over time. We then assess the robustness of our results to several factors: the MFI status of the MFI (for-profit or nonprofit), the definition of the efficiency measure (social and financial) and an observed degree of heterogeneity captured by the percentage of women on the board. Finally, we analyze the relationship between our unobserved heterogeneity factor and institutional and socio-economic indicators.

Keywords: OR in developing countries; Microfinance; Efficiency; Unobserved heterogeneity; Panel data; Nonparametric robust frontier models (search for similar items in EconPapers)
Pages: 22
Date: 2024-08-29
New Economics Papers: this item is included in nep-dev and nep-eff
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