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Financial sustainability and poverty outreach within a network of village banks in Cameroon: A multi-DEA approach

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  • Piot-Lepetit, Isabelle
  • Nzongang, Joseph

Abstract

Microfinance institutions face a double bottom-line. They perform financial tasks by giving microcredits to their customers and support projects aiming at reducing poverty. In doing so, they have to be financially self-sufficient and to target poor people excluded from the traditional financial systems. However, a trade-off may exist between financial sustainability and poverty outreach for these institutions. By using a multi-DEA approach, this paper shows that even if a trade-off exists for 15% of the MC2 (Mutuelles Communautaires de Croissance) in Cameroon, there is no trade-off for 46% of them. In order to increase, without trade-off, financial and social performance of inefficient MC2, a benchmarking approach combing DEA and performance indicators has been developed. DEA is used for identifying best-practices and setting benchmarking goals. Performance indicators are used for characterizing areas needing improvements and following the evolution of MC2 toward their goals, i.e., for implementing benchmarking. Complementarity of both approaches provides a tool box for improving financial and social efficiency and reducing the trade-off between financial sustainability and poverty outreach of microfinance institutions.

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  • Piot-Lepetit, Isabelle & Nzongang, Joseph, 2014. "Financial sustainability and poverty outreach within a network of village banks in Cameroon: A multi-DEA approach," European Journal of Operational Research, Elsevier, vol. 234(1), pages 319-330.
    • Handle: RePEc:eee:ejores:v:234:y:2014:i:1:p:319-330
    DOI: 10.1016/j.ejor.2013.10.004
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