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Technical efficiency in the rural financial sector: evidence from Mexico

Author

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  • Paxton, Julia A.

    (Ohio Unversity-Athens, USA)

Abstract

The void in the rural financial market in Mexico is more pronounced than ever given the retreat of many state programs. In response, small, heterogeneous semi-formal institutions have begun to fill the gap with financial services to rural Mexicans. This study sheds light on this largely undocumented sector by examining the technical efficiency of various institutional types. Data Envelopment Analysis is used to create a nonparametric frontier of technically efficient firms based on a sample of 350 semi-formal financial institutions. Using this framework, the heterogeneity of the sector is highlighted and most institutions are found to be highly inefficient. In a second stage of analysis, the primary determinants of efficiency are found to be institutional factors rather than client profiles.

Suggested Citation

  • Paxton, Julia A., 2006. "Technical efficiency in the rural financial sector: evidence from Mexico," Journal of Developing Areas, Tennessee State University, College of Business, vol. 39(2), pages 101-119, January-M.
    • Handle: RePEc:jda:journl:vol.39:year:2006:issue2:pp:101-119
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    File URL: http://muse.jhu.edu/journals/jda/summary/v039/39.2paxton.html
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    Citations

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    Cited by:

    1. Jesus Fernández-Huertas Moraga, 2008. "Wealth constraints, skill prices or networks: what determines emigrant selection?," Working Papers 346, Barcelona School of Economics.
    2. Shakil Quayes & Baqui Khalily, 2013. "Efficiency of Microfinance Institutions in Bangladesh," Working Papers 19, Institute of Microfinance (InM).
    3. Muneesh Kumar & Padmasai Arora, 2010. "Bank efficiency measurement using alternative techniques of frontier analysis: evidence from India," Afro-Asian Journal of Finance and Accounting, Inderscience Enterprises Ltd, vol. 2(1), pages 40-69.
    4. Fernández-Huertas Moraga, Jesús, 2013. "Understanding different migrant selection patterns in rural and urban Mexico," Journal of Development Economics, Elsevier, vol. 103(C), pages 182-201.
    5. Shakil Quayes & Baqui Khalily, 2014. "Efficiency of Microfinance Institutions in Bangladesh," Economics Bulletin, AccessEcon, vol. 34(3), pages 1512-1521.
    6. Vishal Chandr Jaunky and Lin Zhang, 2016. "Convergence of Operational Efficiency in Chinas Provincial Power Sectors," The Energy Journal, International Association for Energy Economics, vol. 0(China Spe).
    7. Moffat, Boitnmelo & Valadkhani, Abbas & Harvie, Charles, 2008. "Identifying productivity change in Botswana’s financial institutions: an application of Malmquist productivity indices," Economics Working Papers wp08-13, School of Economics, University of Wollongong, NSW, Australia.

    More about this item

    Keywords

    Technical Efficiency; Finance; Mexico;
    All these keywords.

    JEL classification:

    • C1 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • Q14 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Finance

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