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Efficiency of Microfinance Institutions in India: Are They Reaching the Poorest of the Poor?

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  • Prabhjot Kaur

Abstract

Microfinance institutions are being criticized for their shift in the objective of serving the poor to the profit-making institutions. Serving the poor is a relatively costlier issue. Thus, microfinance institutions are being blamed for serving the better off clients. The focus of this study is to look at the financial efficiency of microfinance institutions in India and analyse their efficiency to reach women and the poorest of the poor. Application of Data Envelopment Analysis shows, on an average financial efficiency of Indian MFIs is much higher than their social efficiency. However, study does not find evidence for the presence of trade-off between financial and social efficiency.

Suggested Citation

  • Prabhjot Kaur, 2016. "Efficiency of Microfinance Institutions in India: Are They Reaching the Poorest of the Poor?," Vision, , vol. 20(1), pages 54-65, March.
    • Handle: RePEc:sae:vision:v:20:y:2016:i:1:p:54-65
    DOI: 10.1177/0972262916628988
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    References listed on IDEAS

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    1. Niels Hermes & Marek Hudon, 2018. "Determinants Of The Performance Of Microfinance Institutions: A Systematic Review," Journal of Economic Surveys, Wiley Blackwell, vol. 32(5), pages 1483-1513, December.
    2. Jenny Ruducha & Xinran Huang & James Potter & Divya Hariharan & Danish Ahmad & Sampath Kumar & P. S. Mohanan & Avishek Hazra, 2018. "Perceived Social Networks and Newborn Health: Evidence from Self-Help Group Communities in Northern India," Societies, MDPI, vol. 8(4), pages 1-14, September.
    3. Mahinda Wijesiri & Almudena Martínez-Campillo & Peter Wanke, 2019. "Is there a trade-off between social and financial performance of public commercial banks in India? A multi-activity DEA model with shared inputs and undesirable outputs," Review of Managerial Science, Springer, vol. 13(2), pages 417-442, April.
    4. Hermes, Cornelis & Hudon, M., 2018. "Determinants of the Performance of Microfinance Institutions: A Systematic Review," Research Report 2018008, University of Groningen, Research Institute SOM (Systems, Organisations and Management).

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