Efficiency drivers in microfinance institutions
Master thesis
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http://hdl.handle.net/11250/135454Utgivelsesdato
2009Metadata
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Sammendrag
This study attempts to identify drivers for efficiency in Micro Finance Institutions (MFIs) and
determine their effect on the overall cost-efficiency of MFIs. The study used cross sectional
data of 377 MFIs from 74 countries. Multivariate regression analysis was applied in order to
find the results. Operational expense to portfolio, operational expense to assets and cost per
credit client were used as efficiency measurements, 13 hypotheses were proposed and 17
variables were studied. Our results revealed that all except for two variables had a significant
effect on one or more of the efficiency measurements. Credit officer productivity, cost per
employee, loan outstanding average and credit officer ratio had a strong significant effect on
all measurements. Our findings suggest that MFIs should increase their credit officer
productivity and decrease the personnel expenses per employee in order to increase the
overall cost-efficiency. Moreover, the MFIs should put more of their staff into income
generating activities. Our findings also indicate that the MFIs should focus on more costefficient
operations to avoid increased average loan amount and mission drift. Performance
pay had no significant effect on the MFIs overall efficiency, which indicates that the MFIs
incentive schemes motivate other performance measures than cost-efficiency. Modified
incentives schemes should be considered to improve the cost-efficiency of MFIs.
Beskrivelse
Masteroppgave i økonomi og administrasjon - Universitetet i Agder 2009