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Microfinance efficiency in the West African Economic and Monetary Union: have reforms promoted sustainability or outreach?

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  • KABLAN, Sandrine

Abstract

This study aims to assess the microfinance institutions’ (MFIs’) efficiency in the West African Economic and Monetary Union (WAEMU) after the reforms that were undertaken in the industry. Given the complementary role between MFIs and banks (where MFIs reach the population that the banks cannot), we ask whether these reforms have promoted sustainability or outreach. For this purpose, we use a data envelopment analysis (DEA) to measure the social efficiency on the one hand and the financial efficiency on the other hand. Our results show that sustainability prevails. Indeed, we observe an increase in financial efficiency at the expense of social and financial efficiency. MFIs that stress outreach tend to be less efficient, when one considers their intermediation role. Moreover, reforms have a negative impact on social efficiency and a positive impact on financial efficiency. Indeed, prudential ratios and accounting standards that were implemented, led MFIs to privilege their intermediation role.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 39955.

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Date of creation: 06 Jul 2012
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Handle: RePEc:pra:mprapa:39955

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Keywords: efficiency; microfinance; outreach; reform programs; sustainability; WAEMU;

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  1. Jean Paul Azam & Bruno Biais & Magueye Dia, 2004. "Privatisation versus Regulation in Developing Economies: The Case of West African Banks," Journal of African Economies, Centre for the Study of African Economies (CSAE), Centre for the Study of African Economies (CSAE), vol. 13(3), pages 361-394, September.
  2. Sandrine Kablan, 2009. "African Economic and Monetary Union (WAEMU)," Research Papers, African Economic Research Consortium RP_192, African Economic Research Consortium.
  3. Andrew Worthington, 1998. "The determinants of non-bank financial institution efficiency: a stochastic cost frontier approach," Applied Financial Economics, Taylor & Francis Journals, Taylor & Francis Journals, vol. 8(3), pages 279-287.
  4. 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).
  5. Ben Bassem, 2008. "Efficiency of Microfinance Institutions in the Mediterranean: An Application of DEA," Transition Studies Review, Springer, Springer, vol. 15(2), pages 343-354, September.
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