Exploring the determinants of the productivity of microfinance institutions in India
This paper attempts to investigate the determinants of productivity in microfinance institutions (MFIs) in India using the Empirical Bayesian technique. To do this, we utilize an unbalanced panel data set covering the period 2005-2011 with 292 observations from 64 institutions.Based on theoretical grounds, three broad factors are specified: institutional characteristics, outreach, and efficiency. We find convincing evidence that institutional characteristics and outreach have both positive and negative effects on the productivity of MFIs, depending of the proxy used in the analysis. However,the efficiency of MFIs affects the productivity negatively. Specifically, we find that the age of the institution positively influences the productivity by 6.1581 points, while number of offices and number of personnel negatively affect it by 26.41% and 8.77%, respectively. Of the outreach variables, numbers of active borrowers positively influence productivity by 0.04%, whereas, average loan size appears to have an inverse relationship with productivity. We further find that cost per loan – a proxy for efficiency, has a negative and statistically significant impact of 1.9604 points on the productivity of MFIs. Overall, our investigation suggests that there is a need to build client confidence, pursue innovative credit delivery techniques in reaching out to the poor and achieving high levels of productivity.
|Date of creation:||15 Dec 2012|
|Contact details of provider:|| Postal: Ludwigstraße 33, D-80539 Munich, Germany|
Web page: https://mpra.ub.uni-muenchen.de
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Alin Marius Andries, 2011.
"The Determinants of Bank Efficiency and Productivity Growth in the Central and Eastern European Banking Systems,"
Eastern European Economics,
Taylor & Francis Journals, vol. 49(6), pages 38-59, November.
- Alin Marius Andries, 2011. "The Determinants of Bank Efficiency and Productivity Growth in the Central and Eastern European Banking Systems," Eastern European Economics, M.E. Sharpe, Inc., vol. 49(6), pages 38-59, November.
- Koop, Gary, 1999. "Bayesian Analysis, Computation and Communication Software," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 14(6), pages 677-689, Nov.-Dec..
- Ben Bassem, 2008. "Efficiency of Microfinance Institutions in the Mediterranean: An Application of DEA," Transition Studies Review, Springer;Central Eastern European University Network (CEEUN), vol. 15(2), pages 343-354, September.
- 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.
- Allen N. Berger & David B. Humphrey, 1997. "Efficiency of financial institutions: international survey and directions for future research," Finance and Economics Discussion Series 1997-11, Board of Governors of the Federal Reserve System (U.S.).
- Allen N. Berger & David B. Humphrey, 1997. "Efficiency of Financial Institutions: International Survey and Directions for Future Research," Center for Financial Institutions Working Papers 97-05, Wharton School Center for Financial Institutions, University of Pennsylvania.
- Kent Matthews & Nina Zhang, 2009. "Bank Productivity in China 1997-2007: An Exercise in Measurement," Working Papers 252009, Hong Kong Institute for Monetary Research.
- Matthews, Kent & Zhang, Nina, 2009. "Bank Productivity in China 1997-2007: An Exercise in Measurement," Cardiff Economics Working Papers E2009/14, Cardiff University, Cardiff Business School, Economics Section.
- Conning, Jonathan, 1999. "Outreach, sustainability and leverage in monitored and peer-monitored lending," Journal of Development Economics, Elsevier, vol. 60(1), pages 51-77, October. Full references (including those not matched with items on IDEAS)
When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:45715. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Joachim Winter)
If references are entirely missing, you can add them using this form.