Outreach and Efficiency of Microfinance Institutions
AbstractSummary This paper uses stochastic frontier analysis to examine whether there is a trade-off between outreach to the poor and efficiency of microfinance institutions (MFIs). We find convincing evidence that outreach is negatively related to efficiency of MFIs. More specifically, we find that MFIs that have a lower average loan balance (a measure of the depth of outreach) are also less efficient. Moreover, we find evidence showing that MFIs that have more women borrowers as clients (again a measure of the depth of outreach) are less efficient. These results remain robustly significant after having added a number of control variables.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by Elsevier in its journal World Development.
Volume (Year): 39 (2011)
Issue (Month): 6 (June)
Contact details of provider:
Web page: http://www.elsevier.com/locate/worlddev
microfinance outreach sustainability;
Other versions of this item:
- Meesters, Aljar & Lensink, Robert & Hermes, Niels, 2008. "Outreach and Efficiency of Microfinance Institutions," Research Report 08002, University of Groningen, Research Institute SOM (Systems, Organisations and Management).
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Julia Paxton, 2007. "Technical Efficiency in a Semi-Formal Financial Sector: The Case of Mexico," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 69(1), pages 57-74, 02.
- Martin Desrochers & Mario Lamberte, 2003. "Efficiency and Expense Preference in Philippines' Cooperative Rural Banks," Cahiers de recherche 0321, CIRPEE.
- Mark Schreiner, 2002. "Aspects of outreach: a framework for discussion of the social benefits of microfinance," Journal of International Development, John Wiley & Sons, Ltd., vol. 14(5), pages 591-603.
- Sealey, Calvin W, Jr & Lindley, James T, 1977. "Inputs, Outputs, and a Theory of Production and Cost at Depository Financial Institutions," Journal of Finance, American Finance Association, vol. 32(4), pages 1251-66, September.
- Cull, Robert & Demirguc-Kunt, Asli & Morduch, Jonathan, 2008.
"Microfinance meets the market,"
Policy Research Working Paper Series
4630, The World Bank.
- Daniel Hardy & Paul Holden & Vassili Prokopenko, 2003.
"Microfinance institutions and public policy,"
Journal of Policy Reform,
Taylor and Francis Journals, vol. 6(3), pages 147-158.
- Valentina Hartarska & Denis Nadolnyak, 2007. "Do regulated microfinance institutions achieve better sustainability and outreach? Cross-country evidence," Applied Economics, Taylor and Francis Journals, vol. 39(10), pages 1207-1222.
- Lensink, Robert & Meesters, Aljar & Naaborg, Ilko, 2008. "Bank efficiency and foreign ownership: Do good institutions matter?," Journal of Banking & Finance, Elsevier, vol. 32(5), pages 834-844, May.
- David A. Grigorian & Vlad Manole, 2002.
"Determinants of Commercial Bank Performance in Transition: An Application of Data Envelopment Analysis,"
IMF Working Papers
02/146, International Monetary Fund.
- David A Grigorian & Vlad Manole, 2006. "Determinants of Commercial Bank Performance in Transition: An Application of Data Envelopment Analysis," Comparative Economic Studies, Palgrave Macmillan, vol. 48(3), pages 497-522, September.
- Grigorian, David A. & Manole, Vlad, 2002. "Determinants of commercial bank performance in transition - an application of data envelopment analysis," Policy Research Working Paper Series 2850, The World Bank.
- Sergio Navajas & Jonathan Conning & Claudio Gonzalez-Vega, 2003.
"Lending technologies, competition and consolidation in the market for microfinance in Bolivia,"
Journal of International Development,
John Wiley & Sons, Ltd., vol. 15(6), pages 747-770.
- Jonathan Conning & Sergio Navajas & Claudio Gonzalez-Vega, 2003. "Lending Technologies, Competition, and Consolidation in the Market for Microfinance in Bolivia," Hunter College Department of Economics Working Papers 213, Hunter College: Department of Economics.
- Fries, Steven & Taci, Anita, 2005. "Cost efficiency of banks in transition: Evidence from 289 banks in 15 post-communist countries," Journal of Banking & Finance, Elsevier, vol. 29(1), pages 55-81, January.
- Berger, Allen N. & Hancock, Diana & Humphrey, David B., 1993. "Bank efficiency derived from the profit function," Journal of Banking & Finance, Elsevier, vol. 17(2-3), pages 317-347, April.
- Allen N. Berger & Robert DeYoung, 1995.
"Problem Loans and Cost Efficiency in Commercial Banks,"
Center for Financial Institutions Working Papers
96-01, Wharton School Center for Financial Institutions, University of Pennsylvania.
- Berger, Allen N. & DeYoung, Robert, 1997. "Problem loans and cost efficiency in commercial banks," Journal of Banking & Finance, Elsevier, vol. 21(6), pages 849-870, June.
- Allen N. Berger & Robert DeYoung, 1997. "Problem loans and cost efficiency in commercial banks," Finance and Economics Discussion Series 1997-8, Board of Governors of the Federal Reserve System (U.S.).
- repec:ebl:ecbull:v:9:y:2003:i:2:p:1-10 is not listed on IDEAS
- Brooks,Chris, 2008. "Introductory Econometrics for Finance," Cambridge Books, Cambridge University Press, number 9780521694681, November.
- Craig McIntosh & Alain Janvry & Elisabeth Sadoulet, 2005. "How Rising Competition Among Microfinance Institutions Affects Incumbent Lenders," Economic Journal, Royal Economic Society, vol. 115(506), pages 987-1004, October.
- Weiss, John & Montgomery, Heather, 2004.
"Great expectations: microfinance and poverty reduction in Asia and Latin America,"
33142, University Library of Munich, Germany.
- John Weiss & Heather Montgomery, 2005. "Great Expectations: Microfinance and Poverty Reduction in Asia and Latin America," Oxford Development Studies, Taylor and Francis Journals, vol. 33(3-4), pages 391-416.
- Battese, G E & Coelli, T J, 1995. "A Model for Technical Inefficiency Effects in a Stochastic Frontier Production Function for Panel Data," Empirical Economics, Springer, vol. 20(2), pages 325-32.
- Robert Lensink & Aljar Meesters & Ilko Naaborg, 2008. "Bank efficiency and foreign ownership: do good institutions matter?," ULB Institutional Repository 2013/14283, ULB -- Universite Libre de Bruxelles.
- Conning, Jonathan, 1999. "Outreach, sustainability and leverage in monitored and peer-monitored lending," Journal of Development Economics, Elsevier, vol. 60(1), pages 51-77, October.
- Meeusen, Wim & van den Broeck, Julien, 1977. "Efficiency Estimation from Cobb-Douglas Production Functions with Composed Error," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 18(2), pages 435-44, June.
- Aigner, Dennis & Lovell, C. A. Knox & Schmidt, Peter, 1977. "Formulation and estimation of stochastic frontier production function models," Journal of Econometrics, Elsevier, vol. 6(1), pages 21-37, July.
- Steven B. Caudill & Daniel M. Gropper & Valentina Hartarska, 2009. "Which Microfinance Institutions Are Becoming More Cost Effective with Time? Evidence from a Mixture Model," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 41(4), pages 651-672, 06.
- Gutiérrez-Nieto, Begoña & Serrano-Cinca, Carlos & Mar Molinero, Cecilio, 2007. "Microfinance institutions and efficiency," Omega, Elsevier, vol. 35(2), pages 131-142, April.
- KABLAN, Sandrine, 2012. "Microfinance efficiency in the West African Economic and Monetary Union: have reforms promoted sustainability or outreach?," MPRA Paper 39955, University Library of Munich, Germany.
- Hartarska, Valentina & Shen, Xuan & Mersland, Roy, 2013. "Scale economies and input price elasticities in microfinance institutions," Journal of Banking & Finance, Elsevier, vol. 37(1), pages 118-131.
- Sandrine Kaplan, 2013. "Microfinance efficiency in the West African economic and monetary union: have reforms promoted sustainability or outreach?," Working Papers 25, Department of Research, Ipag Business School.
- Hermes, Niels & Lensink, Robert, 2011. "Microfinance: Its Impact, Outreach, and Sustainability," World Development, Elsevier, vol. 39(6), pages 875-881, June.
- Koen Rossel-Cambier, 2010. "Do Multiple Financial Services Enhance the Poverty Outreach of Microfinance Institutions?," Working Papers CEB 10-058, ULB -- Universite Libre de Bruxelles.
- Ashfaq Ahmad Khan & Wiqar Ahmad, 2013. "Matching resources with demand: a flawed strategy?," Asia-Pacific Development Journal, United Nations Economic and Social Commission for Asia and the Pacific (ESCAP), vol. 20(1), pages 63-89, June.
- Servin, Roselia & Lensink, Robert & van den Berg, Marrit, 2012. "Ownership and technical efficiency of microfinance institutions: Empirical evidence from Latin America," Journal of Banking & Finance, Elsevier, vol. 36(7), pages 2136-2144.
If references are entirely missing, you can add them using this form.