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Social Efficiency in Microfinance Institutions: Identifying How to Improve It

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  • Jorge Gutierrez‐Goiria
  • Leire San‐Jose
  • Jose Luis Retolaza

Abstract

This article analyses the determinants for social and economic efficiency in microfinance institutions using a seemingly unrelated regression. We find two factors that improve their relative efficiency: legal status and target market; however, age and scale are not clear determinants. The main contribution of this paper is to engage microfinance institutions to achieve the desired social efficiency without giving up economic efficiency as the two can be complementary; moreover, it is possible to be efficient as a Non Banking Financial Institution/Non‐Governmental Organization with small size and low‐end target, at least. The paper is a new contribution in line with the so‐called paradox of social cost. Copyright © 2016 John Wiley & Sons, Ltd.

Suggested Citation

  • Jorge Gutierrez‐Goiria & Leire San‐Jose & Jose Luis Retolaza, 2017. "Social Efficiency in Microfinance Institutions: Identifying How to Improve It," Journal of International Development, John Wiley & Sons, Ltd., vol. 29(2), pages 259-280, March.
    • Handle: RePEc:wly:jintdv:v:29:y:2017:i:2:p:259-280
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    Cited by:

    1. Purwanto & Ina Primiana & Dian Masyita & Erie Febrian, 2018. "Social Outreach Model and Efficiency in Sharia Micro Finance Institution: Literature Review," European Research Studies Journal, European Research Studies Journal, vol. 0(3), pages 104-122.
    2. Shamsuddin Ahamad & Hamdan Amer Ali Al-Jaifi & Kizito Uyi Ehigiamusoe, 2023. "Impact of Intellectual Capital on Microfinance Institutions’ Efficiency: the Moderating Role of External Governance," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 14(2), pages 691-717, June.
    3. Leire San-Jose & Jose Luis Retolaza & Eric Lamarque, 2018. "The Social Efficiency for Sustainability: European Cooperative Banking Analysis," Sustainability, MDPI, vol. 10(9), pages 1-21, September.
    4. Niels Hermes & Marek Hudon, 2018. "Determinants Of The Performance Of Microfinance Institutions: A Systematic Review," Journal of Economic Surveys, Wiley Blackwell, vol. 32(5), pages 1483-1513, December.
    5. Michael Adusei & Kwasi Poku & Samuel Akomea, 2023. "Manager bonding and the technical efficiency of cooperative credit unions‐parametric and non‐parametric analyses," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 94(4), pages 1085-1109, December.
    6. Bibi, Uzma & Balli, Hatice Ozer & Matthews, Claire D. & Tripe, David W.L., 2018. "Impact of gender and governance on microfinance efficiency," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 53(C), pages 307-319.
    7. Girma Jirata Duguma & Jiqin Han, 2018. "Effect of Deposit Mobilization on the Financial Sustainability of Rural Saving and Credit Cooperatives: Evidence from Ethiopia," Sustainability, MDPI, vol. 10(10), pages 1-23, September.
    8. Lucas Lopes Ferreira de Souza & Francesca Bassi & Ana Augusta Ferreira de Freitas, 2021. "Longitudinal analysis of microfinance borrowers in Brazil: A dynamic market segmentation," Journal of International Development, John Wiley & Sons, Ltd., vol. 33(6), pages 1063-1083, August.
    9. Hermes, Cornelis & Hudon, M., 2018. "Determinants of the Performance of Microfinance Institutions: A Systematic Review," Research Report 2018008, University of Groningen, Research Institute SOM (Systems, Organisations and Management).

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