Microfinance institutions in Africa, Asia, and Latin America: an empirical analysis of operational efficiency, institutional context and costs Online publication date: Sat, 15-Nov-2014
by Marco Arnone; Carlo Bellavite Pellegrini; Andrea Messa; Laura Pellegrini; Emiliano Sironi
International Journal of Economic Policy in Emerging Economies (IJEPEE), Vol. 5, No. 3, 2012
Abstract: This paper presents an empirical analysis of the operational efficiency of microfinance institutions. Using a cross section of 750 microfinance institutions operating in Asia, Latin America and Sub-Saharan Africa, the analysis shows that operating costs and efficiency are negatively related. More specifically, operating costs are lower when institutions are more focused on traditional financial aspects of commercial banking, thereby improving their efficiency, and enhancing the development of the sector and the quality of offered services. Successively, the study takes into consideration how these above described relationships are declined in different geographical areas. Additional explanations to the observed outcome highlight the importance of different legal and institutional frameworks and of features of macro-governance.
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