Microfinance efficiency in the West African Economic and Monetary Union: have reforms promoted sustainability or outreach?
AbstractThis 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 InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 39955.
Date of creation: 06 Jul 2012
Date of revision:
efficiency; microfinance; outreach; reform programs; sustainability; WAEMU;
Find related papers by JEL classification:
- O55 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - Africa
- C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Longitudinal Data; Spatial Time Series
- O16 - Economic Development, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
- C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
- C67 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Input-Output Models
- G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
This paper has been announced in the following NEP Reports:
- NEP-AFR-2012-07-23 (Africa)
- NEP-ALL-2012-07-23 (All new papers)
- NEP-BAN-2012-07-23 (Banking)
- NEP-EFF-2012-07-23 (Efficiency & Productivity)
- NEP-MFD-2012-07-23 (Microfinance)
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.:
- Andrew Worthington, 1998. "The determinants of non-bank financial institution efficiency: a stochastic cost frontier approach," Applied Financial Economics, Taylor & Francis Journals, vol. 8(3), pages 279-287.
- Sandrine Kablan, 2009. "African Economic and Monetary Union (WAEMU)," Research Papers RP_192, African Economic Research Consortium.
- Meesters, Aljar & Lensink, Robert & Hermes, Niels, 2008.
"Outreach and Efficiency of Microfinance Institutions,"
08002, University of Groningen, Research Institute SOM (Systems, Organisations and Management).
- Hermes, Niels & Lensink, Robert & Meesters, Aljar, 2011. "Outreach and Efficiency of Microfinance Institutions," World Development, Elsevier, vol. 39(6), pages 938-948, June.
- Ben Bassem, 2008. "Efficiency of Microfinance Institutions in the Mediterranean: An Application of DEA," Transition Studies Review, Springer, vol. 15(2), pages 343-354, September.
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