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A panel analysis of microfinance efficiency measures: Evidence on the effects of unobserved managerial ability

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  • Fall, François Seck
  • Tchakoute Tchuigoua, Hubert
  • Vanhems, Anne
  • Simar, Léopold

    (Université catholique de Louvain, LIDAM/ISBA, Belgium)

Abstract

This study analyzes the impact of unobserved heterogeneity on microfinance efficiency. Using panel data for 168 microfinance institutions (MFIs) over the period 20102015, we examine the persistence of the effect of unobserved heterogeneity on microfinance efficiency. Using recent nonparametric and robust techniques, we identify a latent heterogeneity factor related to the ability of MFI managers to promote efficiency, independent of MFI size, and analyze its impact on MFI inefficiency measures over time. We then assess the robustness of our results to several factors: the MFI status of the MFI (for-profit or nonprofit), the definition of the efficiency measure (social and financial) and an observed degree of heterogeneity captured by the percentage of women on the board. Finally, we analyze the relationship between our unobserved heterogeneity factor and institutional and socio-economic indicators.

Suggested Citation

  • Fall, François Seck & Tchakoute Tchuigoua, Hubert & Vanhems, Anne & Simar, Léopold, 2024. "A panel analysis of microfinance efficiency measures: Evidence on the effects of unobserved managerial ability," LIDAM Discussion Papers ISBA 2024020, Université catholique de Louvain, Institute of Statistics, Biostatistics and Actuarial Sciences (ISBA).
    • Handle: RePEc:aiz:louvad:2024020
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    References listed on IDEAS

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    Keywords

    OR in developing countries ; Microfinance ; Efficiency ; Unobserved heterogeneity ; Panel data ; Nonparametric robust frontier models;
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