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Financial Efficiency and Social Impact of Microfinance Institutions Using Self-Organizing Maps

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  • Louis, Philippe
  • Seret, Alex
  • Baesens, Bart

Abstract

This paper contributes to the literature by investigating whether the increased focus on financial self-sustainability of microfinance institutions has been disadvantageous to the target audience. We investigate the association between social efficiency and financial performance using a comprehensive data set that includes 650 microfinance institutions. A self-organizing map methodology is used to fully capture the existing heterogeneity among institutions. The results show that we cannot support the hypothesis that there exists a trade-off. On the contrary, we find evidence of a significant, positive relationship between social efficiency and financial performance.

Suggested Citation

  • Louis, Philippe & Seret, Alex & Baesens, Bart, 2013. "Financial Efficiency and Social Impact of Microfinance Institutions Using Self-Organizing Maps," World Development, Elsevier, vol. 46(C), pages 197-210.
  • Handle: RePEc:eee:wdevel:v:46:y:2013:i:c:p:197-210
    DOI: 10.1016/j.worlddev.2013.02.006
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    References listed on IDEAS

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    Cited by:

    1. Patrick Reichert, 2016. "A meta-analysis examining the nature of trade-offs in microfinance," Working Papers CEB 16-005, ULB -- Universite Libre de Bruxelles.
    2. B. Mak Arvin & Byron Lew (ed.), 2015. "Handbook on the Economics of Foreign Aid," Books, Edward Elgar Publishing, number 15762.
    3. Md Aslam Mia & V. G. R. Chandran, 2016. "Measuring Financial and Social Outreach Productivity of Microfinance Institutions in Bangladesh," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 127(2), pages 505-527, June.
    4. Wijesiri, Mahinda, 2016. "Weathering the storm: ownership structure and performance of microfinance institutions in the wake of the global financial crisis," Economic Modelling, Elsevier, vol. 57(C), pages 238-247.
    5. repec:eee:finlet:v:22:y:2017:i:c:p:81-89 is not listed on IDEAS
    6. Maxime LEBOVICS & Niels HERMES & Marek HUDON, 2016. "Are Financial And Social Efficiency Mutually Exclusive? A Case Study Of Vietnamese Microfinance Institutions," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 87(1), pages 55-77, December.
    7. Janda, Karel & Zetek, Pavel, 2014. "Survey of Microfinance Controversies and Challenges," MPRA Paper 56657, University Library of Munich, Germany.
    8. Catalina Martinez, 2015. "Doing Well by Doing Good? Empirical Evidence from Microfinance," CFD Working Papers 06-2015, Centre for Finance and Development, The Graduate Institute.
    9. Wijesiri, Mahinda & Yaron, Jacob & Meoli, Michele, 2015. "Performance of microfinance institutions in achieving the poverty outreach and financial sustainability: When age and size matter?," MPRA Paper 69821, University Library of Munich, Germany.
    10. repec:pal:eurjdr:v:30:y:2018:i:5:d:10.1057_s41287-018-0135-6 is not listed on IDEAS
    11. repec:bla:annpce:v:89:y:2018:i:4:p:665-696 is not listed on IDEAS
    12. Md Aslam Mia & Shamima Nasrin & Zhang Cheng, 2016. "Quality, quantity and financial sustainability of microfinance: Does resource allocation matter?," Quality & Quantity: International Journal of Methodology, Springer, vol. 50(3), pages 1285-1298, May.
    13. repec:eee:mulfin:v:40:y:2017:i:c:p:63-76 is not listed on IDEAS
    14. Janda, Karel & Zetek, Pavel, 2014. "Mikrofinanční Revoluce: Aktuální Kontroverze A Výzvy
      [Microfinance Revolution: Recent Controversies And Challenges]
      ," MPRA Paper 54098, University Library of Munich, Germany.
    15. Bos, Jaap W.B. & Millone, Matteo, 2015. "Practice What You Preach: Microfinance Business Models and Operational Efficiency," World Development, Elsevier, vol. 70(C), pages 28-42.
    16. repec:bla:jecsur:v:32:y:2018:i:5:p:1483-1513 is not listed on IDEAS
    17. Blanco-Oliver, Antonio & Irimia-Dieguez, Ana & Reguera-Alvarado, Nuria, 2016. "Prediction-oriented PLS path modeling in microfinance research," Journal of Business Research, Elsevier, vol. 69(10), pages 4643-4649.
    18. 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.
    19. Ashim Kumar Kar & Ranjula Bali Swain, 2018. "Competition, Performance and Portfolio Quality in Microfinance Markets," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 30(5), pages 842-870, December.
    20. Dan Brockington & Nicola Banks, 2014. "Exploring the Success of BRAC Tanzania’s Microcredit Programme," Global Development Institute Working Paper Series 20214, GDI, The University of Manchester.
    21. Mia, Md Aslam & Ben Soltane, Bassem Ibrahim, 2016. "Productivity and its determinants in microfinance institutions (MFIs): Evidence from South Asian countries," Economic Analysis and Policy, Elsevier, vol. 51(C), pages 32-45.
    22. 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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