Microfinance institutions and efficiency

Gutiérrez Nieto, Begoña, Serrano Cinca, Carlos and Mar Molinero, Cecilio (2004) Microfinance institutions and efficiency. Southampton, UK, University of Southampton, 40pp. (Discussion Papers in Accounting & Finance, AF04-20).


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Microfinance Institutions (MFIs) are special financial institutions. They have both a social nature and a for-profit nature. Their performance has been traditionally measured by means of financial ratios. The paper uses a Data Envelopment Analysis (DEA) approach to efficiency to show that ratio analysis does not capture DEA efficiency.

Special care is taken in the specification of the DEA model. We take a methodological approach based on multivariate analysis. We rank DEA efficiencies under different models and specifications; e.g., particular sets of inputs and outputs. This serves to explore what is behind a DEA score.

The results show that we can explain MFIs efficiency by means of four principal components of efficiency, and this way we are able to understand differences between DEA scores. It is shown that there are country effects on efficiency; and effects that depend on Non-governmental Organization (NGO)/non-NGO status of the MFI.

Item Type: Monograph (Discussion Paper)
Keywords: microfinance, microcredit, DEA, multivariate analysis, efficiency
Subjects: H Social Sciences > HG Finance
Divisions : University Structure - Pre August 2011 > School of Management
ePrint ID: 36198
Accepted Date and Publication Date:
2004Made publicly available
Date Deposited: 24 May 2006
Last Modified: 01 Oct 2015 08:18
URI: http://eprints.soton.ac.uk/id/eprint/36198

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