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Efficiency of Microfinance Institutions in Bangladesh

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  • Shakil Quayes
  • Baqui Khalily

Abstract

This study presents an empirical analysis of the cost effi ciency of a sample of microfi nance institutions (MFIs) operating in Bangladesh. These MFIs substantially vary in size and can also be characterised by their affi liation with donor and funding agencies. Therefore, the measurement of their performance poses an important challenge for the donor agencies and policymakers. Using stochastic frontier models in the measurement of the level of efficiency for the MFIs, the study suggests that larger MFIs are more effi cient with some evidence of a trade-off between efficiency and outreach.

Suggested Citation

  • Shakil Quayes & Baqui Khalily, 2013. "Efficiency of Microfinance Institutions in Bangladesh," Working Papers 19, Institute of Microfinance (InM).
  • Handle: RePEc:imb:wpaper:19
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    File URL: http://inm.org.bd/publication/workingpaper/workingpaper19.pdf
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    References listed on IDEAS

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    1. Berger, Allen N. & Humphrey, David B., 1997. "Efficiency of financial institutions: International survey and directions for future research," European Journal of Operational Research, Elsevier, vol. 98(2), pages 175-212, April.
    2. K. R. Shanmugam & A. Das, 2004. "Efficiency of Indian commercial banks during the reform period," Applied Financial Economics, Taylor & Francis Journals, vol. 14(9), pages 681-686.
    3. Rusdy Hartungi, 2007. "Understanding the success factors of micro-finance institution in a developing country," International Journal of Social Economics, Emerald Group Publishing, vol. 34(6), pages 388-401, May.
    4. 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 435-444, June.
    5. Huang, Tai-Hsin & Chen, Ying-Hsiu, 2009. "A study on long-run inefficiency levels of a panel dynamic cost frontier under the framework of forward-looking rational expectations," Journal of Banking & Finance, Elsevier, vol. 33(5), pages 842-849, May.
    6. 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, February.
    7. Mark Schreiner, 2003. "A Cost-Effectiveness Analysis of the Grameen Bank of Bangladesh," Development Policy Review, Overseas Development Institute, vol. 21, pages 357-382, May.
    8. 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.
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    Cited by:

    1. Yimga, Jules, 2018. "Microfinance expansion and its effects on cost efficiency," The Quarterly Review of Economics and Finance, Elsevier, vol. 69(C), pages 205-216.
    2. Fall, François & Akim, Al-mouksit & Wassongma, Harouna, 2018. "DEA and SFA research on the efficiency of microfinance institutions: A meta-analysis," World Development, Elsevier, vol. 107(C), pages 176-188.

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