Intermediate Participant Selection Phase: Assessment of Efficiency and Sustainability

This chapter presents the intermediate participant selection phase, pursued in this research investigation. This phase is incorporated in the three-phased sequential explanatory mixed-methods research design, to accomplish the third objective of the research investigation. The third objective aims to identify the efficient and sustainable Microfinance Institutions (MFIs) in India. The Data Envelopment Analysis (DEA) Model, the Sustainability Diamond Model and Benchmarking Process used to fulfil this objective are presented in this chapter. Using these analytical models, the author identifies seven efficient Indian MFIs, which remained sustainable by levying a reasonable interest rate, even before the onset of the crisis and ceilings imposition, in Indian microfinance market. Among these identified MFIs some are found to be charging interest rates ranging from 13–16 per cent, which is much lower than the prevailing regulatory cap of 26 per cent. The managerial practices of these MFIs can be considered to be a reference point for the lesser efficient players in the sector, which aim to enhance their efficiency levels. The extent of inefficiencies that each of these lesser efficient MFIs can trim-off from their operating structure is also depicted in this chapter. Thus overall, this chapter presents a performance analysis on a sample of 50 Indian MFIs, using efficiency and sustainability assessment techniques. The author concludes this chapter by presenting the results of a regression and discriminant analysis undertaken on the efficiency scores of the sample MFIs. The results of this analysis depict the efficiency and sustainability statuses of Indian MFIs, to be independent of their institution specific variables. This makes the author inquisitive to know more about the sustainability management practices of these MFIs, and hence she subsequently pursues as a follow-up qualitative study.