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Do for-profit microfinance institutions achieve better financial efficiency and social impact? A generalised estimating equations panel data approach

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  • Philippe Louis
  • Bart Baesens

Abstract

This article contributes to the literature by investigating the potential benefits of the commercialisation of microfinance. Two types of possible improvements of pursuing profitability are investigated using a comprehensive longitudinal data set spanning 15 periods and covering 456 microfinance institutions (MFIs). The analyses are done using a generalised estimating equations framework in order to correct for the correlations within each cluster. The results show that we cannot support the hypothesis that operating more financially efficient is associated with being registered as for-profit MFIs. With respect to social impact, a lower depth of outreach and less outreach to women are associated with for-profit registration.

Suggested Citation

  • Philippe Louis & Bart Baesens, 2013. "Do for-profit microfinance institutions achieve better financial efficiency and social impact? A generalised estimating equations panel data approach," Journal of Development Effectiveness, Taylor & Francis Journals, vol. 5(3), pages 359-380, September.
    • Handle: RePEc:taf:jdevef:v:5:y:2013:i:3:p:359-380
    DOI: 10.1080/19439342.2013.822015
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    Cited by:

    1. 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.
    2. 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.
    3. Pavitra Dhamija, 2022. "South Africa in the era of Industry 4.0: An Insightful Investigation," Scientometrics, Springer;Akadémiai Kiadó, vol. 127(9), pages 5083-5110, September.
    4. B. Mak Arvin & Byron Lew (ed.), 2015. "Handbook on the Economics of Foreign Aid," Books, Edward Elgar Publishing, number 15762.
    5. Ernest Gyapong & Daniel Gyimah & Ammad Ahmed, 2021. "Religiosity, borrower gender and loan losses in microfinance institutions: a global evidence," Review of Quantitative Finance and Accounting, Springer, vol. 57(2), pages 657-692, August.
    6. Ahmad, Syedah & Lensink, Robert & Mueller, Annika, 2020. "The double bottom line of microfinance: A global comparison between conventional and Islamic microfinance," World Development, Elsevier, vol. 136(C).
    7. Lucia Dalla Pellegrina & Damla Diriker & Paolo Landoni & Davide Moro & Mahinda Wijesiri, 2024. "Financial and social sustainability in the European microfinance sector," Small Business Economics, Springer, vol. 63(3), pages 1249-1292, October.
    8. Crispin John Mbogo, 2024. "Effects of Transformation on Outreach Performance of Microfinance NGOs in Kenya," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 8(2), pages 1972-1987, February.
    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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