KABLAN, Sandrine (2012): Microfinance efficiency in the West African Economic and Monetary Union: have reforms promoted sustainability or outreach?
Download (570kB) | Preview
This study aims to assess the microfinance institutions’ (MFIs’) efficiency in the West African Economic and Monetary Union (WAEMU) after the reforms that were undertaken in the industry. Given the complementary role between MFIs and banks (where MFIs reach the population that the banks cannot), we ask whether these reforms have promoted sustainability or outreach. For this purpose, we use a data envelopment analysis (DEA) to measure the social efficiency on the one hand and the financial efficiency on the other hand. Our results show that sustainability prevails. Indeed, we observe an increase in financial efficiency at the expense of social and financial efficiency. MFIs that stress outreach tend to be less efficient, when one considers their intermediation role. Moreover, reforms have a negative impact on social efficiency and a positive impact on financial efficiency. Indeed, prudential ratios and accounting standards that were implemented, led MFIs to privilege their intermediation role.
|Item Type:||MPRA Paper|
|Original Title:||Microfinance efficiency in the West African Economic and Monetary Union: have reforms promoted sustainability or outreach?|
|Keywords:||efficiency, microfinance, outreach, reform programs, sustainability, WAEMU|
|Subjects:||O - Economic Development, Technological Change, and Growth > O5 - Economywide Country Studies > O55 - Africa
C - Mathematical and Quantitative Methods > C2 - Single Equation Models; Single Variables > C23 - Models with Panel Data; Longitudinal Data; Spatial Time Series
O - Economic Development, Technological Change, and Growth > O1 - Economic Development > O16 - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
C - Mathematical and Quantitative Methods > C6 - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling > C61 - Optimization Techniques; Programming Models; Dynamic Analysis
C - Mathematical and Quantitative Methods > C6 - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling > C67 - Input-Output Models
G - Financial Economics > G2 - Financial Institutions and Services > G21 - Banks; Depository Institutions; Micro Finance Institutions; Mortgages
|Depositing User:||Prof. Sandrine Kablan|
|Date Deposited:||09. Jul 2012 12:22|
|Last Modified:||12. Feb 2013 10:06|
Aryeetey, E. and A. P. Fenny (2010) “From informal to formal finance, lessons from linkage efforts” in M. Quintyn and G. Verdier (Ed.), African finance in 21st century, Palgrave Macmillan Publishing, pp. 87-103.
Armendariz de Aghion, B. and J. Morduch, (2005) The economics of microfinance. Cambridge, MA: MIT Press.
Attali, J., Y. Arthus-Bertrand, P. De Lima (2007) Voyage au cœur d’une révolution : la micro-finance contre la pauvreté (A journey in the heart of a revolution : microfinance and poverty alleviation), Paris : éditions Jean-Claude Lattès.
Azam, J. P., B. Biais, M. Dia (2004) “Privatisation in developing Economies: the case of West African Banks”, Journal of African Economies, 13(3): 361-394.
Barr, M. (2005) “Microfinance and financial development”, Michigan Journal of International Law, 26: 271-96.
Bassem S. B. (2008) “Efficiency of micro finance institutions in the Mediterranean: an application of DEA”, Mediterranean and Middle East Papers, 15(2): 343-354.
Daumont R., F. Le Gall, F. Le Roux, (2004), “Banking in Sub-Saharan Africa: What went wrong?” IMF Working Paper WP 04/55, Washington, International Monetary Fund.
Gutiérez-Nieto, B., C. Serrano-Cinca, C. Mar molinero (2009), “Social efficiency in microfinance institutions”, Journal of Operational Research Society, 60:104-119.
Gutiérez-Nieto, B., C. Serrano-Cinca, C. Mar molinero (2007) “Microfinance and efficiency” Omega, 35: 131-142.
Haq, M., M. Skully and P. Shams (2009) “Efficiency of microfinance institutions: A Data Envelopment analysis”, SSRN working paper 1405709, http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1405709, (accessed 15 October 2011).
Hermes, N., R. Lensink, A. Meesters (2011) “Outreach and efficiency of microfinance institutions”, World development, 39: 938-948.
Kablan, S. 2009, “Mesure de la performance des banques dans les pays en développement : le cas de l’union économique et monétaire Ouest Africaine”( Measuring bank efficiency in developing countries the case of West African Economic and Monetary Union), African Development Review, 21(2) : 367-399.
Makame, A. H., & Murinde, V. (2006). Empirical findings on cognitive dissonance around microfinance outreach and sustainability. Unpublished paper. University of Birmingham, Birmingham.
Monographie des systèmes financiers décentralisés de l’UMOA (Monography of Decentralized Financial Systems), (2000-2006).
Qayyum, A. and M. Ahmad, “Efficiency and sustainability of Microfinance institutions”, MPRA working paper 11674, Munich, http://mpra.ub.uni-muenchen.de/34215/ (accessed 10 October 2011)
Serrano-Cinca, C., B. Gutiérez-Nieto, C. Mar Molinero, “ Social and financial efficiency of micro-finance institutions”, forthcoming in Handbook of microfinance.
Soulama, S. (2005) Micro-finance, pauvreté et développement (Microfinance, poverty and development), Paris : Edition des archives contemporaines.
Soulama, S. (2008) Efficacité technique et inefficience à l’échelle des institutions de micro-finance au Burkina Faso (Technical efficiency and scale inefficiency of Microfinance institutions in Burkina Faso), Laboratoire d’Economie d’Orléans. http://www.lamicrofinance.org/content/article/detail/21741/
Vargese, A. (2005) “Bank-moneylender linkage as an alternative to bank competition in rural credit markets.” Oxford Economic papers, 57(2) : 315-335.
Varman M. (2008) “Benchmarking microfinance institutions in India and determinants of their technical efficiency”, Indian Journal of Economics and Business, 7 (2):102-111.
Worthington, A., 1998, “The determinants of non-bank financial institution efficiency: a stochastic cost-frontier approach”, Applied Financial Economics, 8(3):279-87.