How Efficient Are the Ethiopian Microfinance Institutions in Extending Financial Services to the Poor? A Comparison with the Commercial Banks

Kebede, Hundanol Atnafu; Berhanu, Wassie

doi:10.1093/jae/ejs012

Cited by 15 publications

(13 citation statements)

References 17 publications

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“…Agricultural [66][67][68] and microenterprise loans [47,48,69] are financial aspects that are relevant to scientific research and that institutions report positively for all regions. Two other aspects which are widely investigated issues and are also reported in Africa, South Asia, and EAP regions are loans for other households' needs [39,68] and other education services [70,71].…”

Section: Convergences: Reported and Researchedmentioning

confidence: 99%

Microfinance Institutions Fostering Sustainable Development by Region

2020

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In the last few years, considerable attention has been paid to microfinance as a relevant participant in the formal financial system, whose target audience is people who are otherwise at risk of financial exclusion. In parallel, sustainability and the promotion of Sustainable Development (SD) are imposed as the theoretical frame when facing any study. This, connected with cultural and organizational dimensions theories, are the analytical framework for the analysis of the relationship between the context of performance in which Microfinance Institutions (MFIs) operate and their activity in promoting sustainability. A holistic approach is necessary to make operational these concepts; for that reason, financial, environmental, social and governance dimensions (FESG), and the balance among them, have to be considered. The main objective of the paper is to explore to what extent MFIs are fostering SD, and how this promotion is performed by region. For the analysis, two different sources of information have been studied: sectoral academic literature that focuses on the different sustainability dimensions, and MIX Market sustainability data obtained from the MFIs. A keyword analysis of the selected papers has been executed to be conscious of the most investigated aspects by region; on the data provided by the institutions, a Kruskal-Wallis H test has been performed to learn what the main Sustainability Indicators (SIs) are that are reported affirmatively. To obtain comprehensive research, a comparative study of the results offers the convergences, divergences and gaps of information in each of the regions. The findings show significant differences depending on the region, and confirm that operationalization should be adjusted at the regional context of the MFIs. The paper, with the inherent limitations due to data quality, also offers recommendations for the better promotion of sustainability in each of the regions.

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Section: Convergences: Reported and Researchedmentioning

confidence: 99%

Microfinance Institutions Fostering Sustainable Development by Region

2020

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“…Despite the numerous studies focusing on banking efficiency and productivity using DEA (Berger & Humphrey, 1992;Berger & Humphrey, 1997;Fukuyama & Weber 2009a, b, 2010Holod and Lewis, 2011;Sufian, 2010), an in-depth analysis of banks in Africa is still missing (O'Donnell & Westhnizen, 2002;Azam, Biais, & Dia, 2004;Figueira Kirkpatrick et al, 2007;Okeahalam, 2008;Ikhide, 2008;Kiyota, 2009;Assaf et al, 2010;Kebede and Wassie, 2013), thus indicating a literature gap. The situation contrasts with the extensive research that has been carried out on American banks (Berger, et al, 1987;Bauer, et al 1993;Berger & Humphrey, 1997), on European banks (Barros et al, 2007;Barros et al, 2009;Williams et al, 2010;Kontolaimou & Tsekouras, 2010), Asian banks (Berger et al, 2009;Chen et al, 2005;Kumbhakar & Wang, 2005;Assaf et al 2010;Barros et al, 2010;Barros et al, 2012), and even South American banks (Staub, Souza, & Tabak, 2010;Wanke & Barros, 2014).…”

Section: Review Of the Literaturementioning

confidence: 99%

Assessing productive efficiency of banks using integrated Fuzzy-DEA and bootstrapping: A case of Mozambican banks

Wänke

Barros²,

Emrouznejad

2016

European Journal of Operational Research

139

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“…Admittedly, there are empirical studies on the performance of MFIs both in Ethiopia and elsewhere (Tsegaye 2009;Abate et al 2014;Assefa et al 2013;Servin et al 2012;Kipesha 2013;Vanroose and D'Espallier 2013;Wolday 2004;Cull et al 2007;Hermes et al 2011). However, while some of the previous studies (Abate et al 2014;Hermes et al 2011;Kebede and Berhanu 2012) focus on a single performance indicator (cost efficiency), others are either dated studies using cross-sectional data or focus on cases of other countries.…”

Section: Introductionmentioning

confidence: 99%

Performance of Microfinance Institutions in Ethiopia: Integrating Financial and Social Metrics

2019

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Since their inception in the 1970s, microfinance institutions (MFIs) have received increasing attention both from policymakers and academic circles. Using unbalanced panel data (2000–2017) from Ethiopia, in this paper, we investigated the performance of MFIs and its determinants on the one hand and whether or not mission drift exists on the other hand. To this end, we employed seemingly unrelated regression (SUR) and fixed/random effect panel models. The results indicate that, based on different outreach and financial performance metrics, the MFIs in Ethiopia have good performance compared with those of the 10 biggest economies in Sub-Saharan Africa (SSA). The econometric estimation results show that asset holding and the yield on gross portfolio have a positive and significant effect on the social and financial performances of MFIs in Ethiopia. Furthermore, the number of loan officers, loan officer productivity, and personnel productivity have a positive and significant impact on the financial performance of MFIs. Our results also suggest that the null hypothesis—that MFIs are not shifting away from poorer clients—cannot be rejected, implying that there is no mission drift by MFIs in Ethiopia.

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How Efficient Are the Ethiopian Microfinance Institutions in Extending Financial Services to the Poor? A Comparison with the Commercial Banks

Cited by 15 publications

References 17 publications

Microfinance Institutions Fostering Sustainable Development by Region

Microfinance Institutions Fostering Sustainable Development by Region

Assessing productive efficiency of banks using integrated Fuzzy-DEA and bootstrapping: A case of Mozambican banks

Performance of Microfinance Institutions in Ethiopia: Integrating Financial and Social Metrics

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