Microfinance efficiency in the West African Economic and Monetary Union: have reforms promoted sustainability or outreach?

KABLAN, Sandrine (2012): Microfinance efficiency in the West African Economic and Monetary Union: have reforms promoted sustainability or outreach?

Abstract

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
• Language: English
• Keywords: efficiency, microfinance, outreach, reform programs, sustainability, WAEMU
• Subjects: O - Economic Development, Innovation, Technological Change, and Growth > O5 - Economywide Country Studies > O55 - Africa; C - Mathematical and Quantitative Methods > C2 - Single Equation Models ; Single Variables > C23 - Panel Data Models ; Spatio-temporal Models; O - Economic Development, Innovation, 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

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