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Financial Efficiency and Social Impact of Microfinance Institutions Using Self-Organizing Maps

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  • Louis, Philippe
  • Seret, Alex
  • Baesens, Bart

Abstract

This paper contributes to the literature by investigating whether the increased focus on financial self-sustainability of microfinance institutions has been disadvantageous to the target audience. We investigate the association between social efficiency and financial performance using a comprehensive data set that includes 650 microfinance institutions. A self-organizing map methodology is used to fully capture the existing heterogeneity among institutions. The results show that we cannot support the hypothesis that there exists a trade-off. On the contrary, we find evidence of a significant, positive relationship between social efficiency and financial performance.

Suggested Citation

  • Louis, Philippe & Seret, Alex & Baesens, Bart, 2013. "Financial Efficiency and Social Impact of Microfinance Institutions Using Self-Organizing Maps," World Development, Elsevier, vol. 46(C), pages 197-210.
    • Handle: RePEc:eee:wdevel:v:46:y:2013:i:c:p:197-210
    DOI: 10.1016/j.worlddev.2013.02.006
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