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The Efficiency of Formal Microfinance in Indonesia: Using Data Envelopment Analysis Application

Author

Listed:
  • Farida Farida

    (Faculty of Economics, Persada YAI University, Jakarta, Indonesia.)

  • Irwan R. Osman

    (Faculty of Economics, STIE YAI, Jakarta, Indonesia.)

  • Agus Kurniawan Lim

    (Faculty of Economics, Persada YAI University, Jakarta, Indonesia.)

  • Nur Wahyuni

    (Faculty of Economics, Persada YAI University, Jakarta, Indonesia.)

Abstract

One of the key success factors of the financial institution sustainability is operational efficiencies. Using Data Envelopment Analysis (DEA), this paper measures the relative efficiency of the executing banking units of people business credit (KUR) program in Indonesia. Sample data of this study were obtained from all banking units from banks providing KUR located in the district of Pati, Central Java - district with the largest KUR receiver. This study consists of two stages of analyses: (1) it is found that 18 of the 35 banking units (51.43%) are in the scale efficiency, with units receiving 100% efficiency score being called efficient; (2) an output target is shown for the purpose of maximizing the output of the KUR disbursement without additional inputs.

Suggested Citation

  • Farida Farida & Irwan R. Osman & Agus Kurniawan Lim & Nur Wahyuni, 2018. "The Efficiency of Formal Microfinance in Indonesia: Using Data Envelopment Analysis Application," Iranian Economic Review (IER), Faculty of Economics,University of Tehran.Tehran,Iran, vol. 22(3), pages 791-814, Summer.
    • Handle: RePEc:eut:journl:v:22:y:2018:i:3:p:791
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    Cited by:

    1. Muhammad Mohsin & Mohammad Nurunnabi & Jijian Zhang & Huaping Sun & Nadeem Iqbal & Robina Iram & Qaiser Abbas, 2021. "The evaluation of efficiency and value addition of IFRS endorsement towards earnings timeliness disclosure," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 26(2), pages 1793-1807, April.

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