HAL will be down for maintenance from Friday, June 10 at 4pm through Monday, June 13 at 9am. More information
Skip to Main content Skip to Navigation
Conference papers

Microfinance industry: understanding the positive link between social and
financial performances. Empirical evidence from the application of DEA
and a mutivariate analysis to 28 Peruvian MFIs

Abstract : The purpose of this paper is to extend earlier research on the assessment and the understanding of
microfinance institution (MFI) efficiency. It also aims at demonstrating that there can be a positive
link between social performance (SP) and financial performance (FP) in microfinance industry.
MFIs are organisations that respond to a double bottom-line – i.e. complying with both SP and FP
goals. To date, their efficiency has been solely assessed by means of financial ratios. It is suggested
that efficiency measurement of MFIs should include other indicators to better appraise the entirety of
their activiy.
The two-step methodological approach combines the Data Envelopment Analysis (DEA) tool and a
mulivariate analysis. These methods are applied to MIXMARKET data that correspond to a sample of
28 Peruvian MFIs.
In the first instance, DEA efficiency scores are obtained and ranked for every specification –
particuliar set of inputs/outputs. A relevant remark must be formulated: the complete model (including
all inputs and outputs) incorporates both financial and social variables.
In the second instance, the multivariate analysis carried out enables to go further into the interpretation
of the DEA scores, that is to say beyond the sole comparison of simple efficiencies. The two principal
components extracted are significant vectors of information in so far they help understand better why a
DMU reaches a certain level of efficiency under a given specification. In other words, the choice of a
peculiar specification impacts the efficiency assessment.
These results confirm preceding findings revealed with the same methodological design. Moreover,
this investigation is believed to make a contribution to the question posed by the contradictory studies
upon the relationships between SP and FP. It provides empirical evidence that there is no trade-off
between SP and FP and even it supports the hypothesis that the link between SP and FP is positive.
Finally, it offers additional insights about this relationship by opening the “black box” of an MFI's
sources of efficiency: best practices are idendified, route to performance traced and status effect
highlighted (Regrouping of DMUs on the graph according to their status).
To conclude, this work is part of an attempt to show that DEA approach is relevant to assess efficiency
and productivity beyond ratio analysis by incorporating other types of variables. The research can be
replicated to other sectors whose activies entail the necessity of measuring double or triple bottom-line
efficiency.
Document type :
Conference papers
Complete list of metadata

https://halshs.archives-ouvertes.fr/halshs-00380074
Contributor : Dominique Maraine-Scipanov Connect in order to contact the contributor
Submitted on : Wednesday, April 29, 2009 - 5:15:26 PM
Last modification on : Tuesday, October 19, 2021 - 11:34:03 PM

Identifiers

  • HAL Id : halshs-00380074, version 1

Citation

Simon Cornée, Gervais Thenet. Microfinance industry: understanding the positive link between social and
financial performances. Empirical evidence from the application of DEA
and a mutivariate analysis to 28 Peruvian MFIs. European Workshop on Efficiency and Productivity Analysis, Jun 2007, Lille, France. 8 p. ⟨halshs-00380074⟩

Share

Metrics

Record views

96