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Efficiency Analysis of Micro-finance Institutions in Pakistan

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  • Ahmad, Usman

Abstract

Microfinance collectively refers to the supply of loans, savings accounts, and other basic financial services like insurance, to the poor. About one billion people globally live in households with per capita incomes of one dollar per day (Morduch J. 1999). Microfinance Institutions (MFIs) are special financial institutions. They have both a social nature and a for-profit nature. Their performance has been traditionally measured by means of financial ratios. The objective of the study has been to estimate the efficiency of microfinance institutions in Pakistan. Non parametric Data Envelopment analysis has been used to analyze the efficiency of these institutions by using data for the year 2003 and 2007 respectively. Both input oriented and output oriented methods have been considered under the assumption of constant return to scale technologies and microfinance should provide services on sustainable basis. A microfinance institution is said to be financially sustainable if it without the use of subsidies, grants, or other concessional resources, it can profitably provide finance to micro enterprises on an acceptable scale.

Suggested Citation

  • Ahmad, Usman, 2011. "Efficiency Analysis of Micro-finance Institutions in Pakistan," MPRA Paper 34215, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:34215
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    File URL: https://mpra.ub.uni-muenchen.de/34215/1/MPRA_paper_34215.pdf
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    References listed on IDEAS

    as
    1. Afriat, Sidney N, 1972. "Efficiency Estimation of Production Function," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 13(3), pages 568-598, October.
    2. James Laurenceson & Hong Son Nghiem, "undated". "The nature of NGO microfinance in Vietnam and stakeholders� perceptions of effectiveness," EAERG Discussion Paper Series 0305, School of Economics, University of Queensland, Australia.
    3. Hossain, Mahabub, 1988. "Credit for alleviation of rural poverty: the Grameen Bank in Bangladesh," Research reports 65, International Food Policy Research Institute (IFPRI).
    4. Qayyum, Abdul & Ahmad, Munir, 2006. "Efficiency and Sustainability of Micro Finance," MPRA Paper 11674, University Library of Munich, Germany.
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    Cited by:

    1. Soltane Bassem, Ben, 2014. "Total factor productivity change of MENA microfinance institutions: A Malmquist productivity index approach," Economic Modelling, Elsevier, vol. 39(C), pages 182-189.
    2. repec:rss:jnljef:v3i4p3 is not listed on IDEAS

    More about this item

    Keywords

    DEA; Efficiency; Microfinance; Pakistan;

    JEL classification:

    • D53 - Microeconomics - - General Equilibrium and Disequilibrium - - - Financial Markets
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies

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