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Performance of microfinance institutions in the MENA region: a comparative analysis

Performance of microfinance institutions in the MENA region: a comparative analysis The purpose of this paper is to provide preliminary efficiency assessment of Arab microfinance institutions (MFIs) within the period 2002–2012. Microfinance is defined as the provision of financial services to poor and low-income households and their microenterprises on a sustainable basis.Design/methodology/approachThe authors first present the main features of microfinance in the Middle East and North Africa (MENA) region. Second, based on a simple of 72 microfinance institutions issued from ten countries of the region, they develop a bootstrap–data envelopment analysis (bootstrap–DEA) framework to measure Arab MFIs’ efficiency. Finally, they apply parametric and non-parametric tests to compare the performance and identify factors that contribute to the efficiency of Arab Islamic microfinance institutions.FindingsEfficiency scores of the MENA region exhibit high variability, both across time and countries. Significant difference in efficiency was found due to MFI age or regulation. Results also reveal the ability of Arab MFIs to combine social and financial performance and their solidity in time of crisis.Originality/valueIn this paper, the authors apply DEA–bootstrap method on a large sample of Arab MFI with special look at the peer group differences. Unlike most previous relevant studies, the paper overcomes many of the drawbacks of the DEA method by using, in addition to the DEA–bootstrap approach, a test of return to scale and a combination of three procedures to detect outliers. Furthermore, this paper analyses the efficiency of MFI in the MENA region in the light of financial crises and Arab Spring. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png International Journal of Social Economics Emerald Publishing

Performance of microfinance institutions in the MENA region: a comparative analysis

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References (44)

Publisher
Emerald Publishing
Copyright
© Emerald Publishing Limited
ISSN
0306-8293
DOI
10.1108/ijse-06-2017-0242
Publisher site
See Article on Publisher Site

Abstract

The purpose of this paper is to provide preliminary efficiency assessment of Arab microfinance institutions (MFIs) within the period 2002–2012. Microfinance is defined as the provision of financial services to poor and low-income households and their microenterprises on a sustainable basis.Design/methodology/approachThe authors first present the main features of microfinance in the Middle East and North Africa (MENA) region. Second, based on a simple of 72 microfinance institutions issued from ten countries of the region, they develop a bootstrap–data envelopment analysis (bootstrap–DEA) framework to measure Arab MFIs’ efficiency. Finally, they apply parametric and non-parametric tests to compare the performance and identify factors that contribute to the efficiency of Arab Islamic microfinance institutions.FindingsEfficiency scores of the MENA region exhibit high variability, both across time and countries. Significant difference in efficiency was found due to MFI age or regulation. Results also reveal the ability of Arab MFIs to combine social and financial performance and their solidity in time of crisis.Originality/valueIn this paper, the authors apply DEA–bootstrap method on a large sample of Arab MFI with special look at the peer group differences. Unlike most previous relevant studies, the paper overcomes many of the drawbacks of the DEA method by using, in addition to the DEA–bootstrap approach, a test of return to scale and a combination of three procedures to detect outliers. Furthermore, this paper analyses the efficiency of MFI in the MENA region in the light of financial crises and Arab Spring.

Journal

International Journal of Social Economics – Emerald Publishing

Published: Jan 7, 2019

Keywords: Microfinance; Efficiency; MENA region; DEA–Bootstrap; C14; 016; G21

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