Outreach and Efficiency of Microfinance Institutions
Summary This paper uses stochastic frontier analysis to examine whether there is a trade-off between outreach to the poor and efficiency of microfinance institutions (MFIs). We find convincing evidence that outreach is negatively related to efficiency of MFIs. More specifically, we find that MFIs that have a lower average loan balance (a measure of the depth of outreach) are also less efficient. Moreover, we find evidence showing that MFIs that have more women borrowers as clients (again a measure of the depth of outreach) are less efficient. These results remain robustly significant after having added a number of control variables.
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.:
- Cull, Robert & Demirguc-Kunt, Asli & Morduch, Jonathan, 2008.
"Microfinance meets the market,"
Policy Research Working Paper Series
4630, The World Bank.
- Julia Paxton, 2007. "Technical Efficiency in a Semi-Formal Financial Sector: The Case of Mexico," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 69(1), pages 57-74, 02.
- Martin Desrochers & Mario Lamberte, 2003. "Efficiency and Expense Preference in Philippines' Cooperative Rural Banks," Cahiers de recherche 0321, CIRPEE.
- Jonathan Conning & Sergio Navajas & Claudio Gonzalez-Vega, 2003.
"Lending Technologies, Competition, and Consolidation in the Market for Microfinance in Bolivia,"
Economics Working Paper Archive at Hunter College
213, Hunter College Department of Economics.
- Sergio Navajas & Jonathan Conning & Claudio Gonzalez-Vega, 2003. "Lending technologies, competition and consolidation in the market for microfinance in Bolivia," Journal of International Development, John Wiley & Sons, Ltd., vol. 15(6), pages 747-770.
- David A. Grigorian & Vlad Manole, 2002.
"Determinants of Commercial Bank Performance in Transition: An Application of Data Envelopment Analysis,"
IMF Working Papers
02/146, International Monetary Fund.
- David A Grigorian & Vlad Manole, 2006. "Determinants of Commercial Bank Performance in Transition: An Application of Data Envelopment Analysis," Comparative Economic Studies, Palgrave Macmillan, vol. 48(3), pages 497-522, September.
- Grigorian, David A. & Manole, Vlad, 2002. "Determinants of commercial bank performance in transition - an application of data envelopment analysis," Policy Research Working Paper Series 2850, The World Bank.
- Gutiérrez-Nieto, Begoña & Serrano-Cinca, Carlos & Mar Molinero, Cecilio, 2007. "Microfinance institutions and efficiency," Omega, Elsevier, vol. 35(2), pages 131-142, April.
- repec:ebl:ecbull:v:9:y:2003:i:2:p:1-10 is not listed on IDEAS
- Robert Lensink & Aljar Meesters & Ilko Naaborg, 2008.
"Bank efficiency and foreign ownership: do good institutions matter?,"
ULB Institutional Repository
2013/14283, ULB -- Universite Libre de Bruxelles.
- Lensink, Robert & Meesters, Aljar & Naaborg, Ilko, 2008. "Bank efficiency and foreign ownership: Do good institutions matter?," Journal of Banking & Finance, Elsevier, vol. 32(5), pages 834-844, May.
- Mark Schreiner, 2002. "Aspects of outreach: a framework for discussion of the social benefits of microfinance," Journal of International Development, John Wiley & Sons, Ltd., vol. 14(5), pages 591-603.
- Weiss, John & Montgomery, Heather, 2004.
"Great expectations: microfinance and poverty reduction in Asia and Latin America,"
33142, University Library of Munich, Germany.
- John Weiss & Heather Montgomery, 2005. "Great Expectations: Microfinance and Poverty Reduction in Asia and Latin America," Oxford Development Studies, Taylor & Francis Journals, vol. 33(3-4), pages 391-416.
- Craig McIntosh & Alain Janvry & Elisabeth Sadoulet, 2005. "How Rising Competition Among Microfinance Institutions Affects Incumbent Lenders," Economic Journal, Royal Economic Society, vol. 115(506), pages 987-1004, October.
- Conning, Jonathan, 1999. "Outreach, sustainability and leverage in monitored and peer-monitored lending," Journal of Development Economics, Elsevier, vol. 60(1), pages 51-77, October.
- Aigner, Dennis & Lovell, C. A. Knox & Schmidt, Peter, 1977. "Formulation and estimation of stochastic frontier production function models," Journal of Econometrics, Elsevier, vol. 6(1), pages 21-37, July.
- Fries, Steven & Taci, Anita, 2005. "Cost efficiency of banks in transition: Evidence from 289 banks in 15 post-communist countries," Journal of Banking & Finance, Elsevier, vol. 29(1), pages 55-81, January.
- Wang, Hung-jen & Schmidt, Peter, 2001.
"One-step and two-step estimation of the effects of exogenous variables on technical efficiency levels,"
31075, University Library of Munich, Germany, revised Mar 2002.
- Hung-jen Wang & Peter Schmidt, 2002. "One-Step and Two-Step Estimation of the Effects of Exogenous Variables on Technical Efficiency Levels," Journal of Productivity Analysis, Springer, vol. 18(2), pages 129-144, September.
- Valentina Hartarska & Denis Nadolnyak, 2007. "Do regulated microfinance institutions achieve better sustainability and outreach? Cross-country evidence," Applied Economics, Taylor & Francis Journals, vol. 39(10), pages 1207-1222.
- Berger, Allen N. & DeYoung, Robert, 1997.
"Problem loans and cost efficiency in commercial banks,"
Journal of Banking & Finance,
Elsevier, vol. 21(6), pages 849-870, June.
- Allen N. Berger & Robert DeYoung, 1995. "Problem Loans and Cost Efficiency in Commercial Banks," Center for Financial Institutions Working Papers 96-01, Wharton School Center for Financial Institutions, University of Pennsylvania.
- Allen N. Berger & Robert DeYoung, 1997. "Problem loans and cost efficiency in commercial banks," Finance and Economics Discussion Series 1997-8, Board of Governors of the Federal Reserve System (U.S.).
- Sealey, Calvin W, Jr & Lindley, James T, 1977. "Inputs, Outputs, and a Theory of Production and Cost at Depository Financial Institutions," Journal of Finance, American Finance Association, vol. 32(4), pages 1251-66, September.
- Battese, G E & Coelli, T J, 1995. "A Model for Technical Inefficiency Effects in a Stochastic Frontier Production Function for Panel Data," Empirical Economics, Springer, vol. 20(2), pages 325-32.
- Meeusen, Wim & van den Broeck, Julien, 1977. "Efficiency Estimation from Cobb-Douglas Production Functions with Composed Error," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 18(2), pages 435-44, June.
- Berger, Allen N. & Hancock, Diana & Humphrey, David B., 1993. "Bank efficiency derived from the profit function," Journal of Banking & Finance, Elsevier, vol. 17(2-3), pages 317-347, April.
- Steven B. Caudill & Daniel M. Gropper & Valentina Hartarska, 2009. "Which Microfinance Institutions Are Becoming More Cost Effective with Time? Evidence from a Mixture Model," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 41(4), pages 651-672, 06.
When requesting a correction, please mention this item's handle: RePEc:eee:wdevel:v:39:y:2011:i:6:p:938-948. See general information about how to correct material in RePEc.
If references are entirely missing, you can add them using this form.