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Social efficiency in microfinance institutions

Author

Listed:
  • B Gutiérrez-Nieto

    (Universidad de Zaragoza)

  • C Serrano-Cinca

    (Universidad de Zaragoza)

  • C Mar Molinero

    (University of Kent)

Abstract

Microfinance institutions (MFIs) are a special case in the financial world. They have a double financial and social role and need to be efficient at both. In this paper, we try to measure the efficiency of MFIs in relation to financial and social outputs using data envelopment analysis. For the analysis of financial efficiency, we rely on existing literature for traditional financial institutions. To this we have added two indicators of social performance: impact on women and a poverty reach index. We have studied the relationship between social and financial efficiency, and the relationship between efficiency and other indicators, such as profitability. Other aspects studied are the relation between social efficiency and type of institution—Non-Governmental Organization (NGO)—, non-NGO, and the importance of geographical region of activity. The results reveal the importance of social efficiency assessment.

Suggested Citation

  • B Gutiérrez-Nieto & C Serrano-Cinca & C Mar Molinero, 2009. "Social efficiency in microfinance institutions," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 60(1), pages 104-119, January.
    • Handle: RePEc:pal:jorsoc:v:60:y:2009:i:1:d:10.1057_palgrave.jors.2602527
    DOI: 10.1057/palgrave.jors.2602527
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