Browsing by Author "EIerna, Yitay"

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    Assessment of Institutional Performance and Sustainability of Selected Microfinance Institutions: A Data Envelopment Analysis Approach
    (A.A.U, 2011-06) EIerna, Yitay; -, Ulanghatan (Dr)
    In this study attempts are made to evaluate the institutional performance and sustainability of six MFIs employing conventional financial performance and sustainability indicators and non-parametric DEA-based malmquist total factor productivity index model. The study period covered 2003 to 2009. DEA-based malmquist total factor productivity index model is applied on panel data to derive total factor productivity growth under both production and intermediation approach which could be decomposed as technological change and technical efficiency change. The results of conventional financial performance and sustainability indicators revealed that all MFIs' outreach performance has increased during the study period. Despite the increase in outreach performance, it is difficult for the institutions to operate and expand without subsidies. This is reflected by their financial self-sufficiency ratios. During the study period all most all MFIs in the sample reported below the minimum requirement financial self-sufficiency ratio. This indicated the long-term sustainability of MFIs is in question once the subsidies are dried-up. Respondents' response also confirmed that grants are preferable as primary source of fund rather than retained earnings and member saving In the study the researcher identified that, technological change has higher value relevance than technical efficiency gain. By decomposing technical efficiency the researcher also observed pure technical efficiency gain has a substantially higher explanatory power than scale efficiency gain. The researcher also found that the intermediation services which is the responsibility of the MFIs to transfer funds from surplus groups such as from savers and donors to the deficit groups particularly borrowers or investors are more productive than the production responsibility of MFIs which considers the institutions as producers of deposits and loans. During the study period the institutions reported average productivity growth of 20.7% under both input and output oriented intermediation approach. In both cases the shift in total factor productivity was observed due to technological progress. Under the production approach in both input and output oriented measures an average productivity deterioration of 5.3% was identified. This decline in productivity was the result of 5.6% retrogresses in technology, though there was a marginal 0.4% gain in technical efficiency.