Performance of microfinance institutions

performance of microfinance institutions

Krishna Reddy

American Journal of Business and Management, Vol. 2, No. 2, pp. 173-180

Many microfinance institutions (MFIs) are currently drifting away from their original mission of alleviating poverty. The objective of this article is to identify and update significant social performance (SP) for micro-finance institutions (MFIs) by viewing social performance measures as a way to address the development of MFIs. Unlike traditional performance measurements, social performance measurements are more allied with the organization's social and development goals. This study has therefore reviewed prior empirical studies and consultancy reports dealing with poverty alleviation to determine important social performance measurements for MFIs to achieve their social goals. Further, this study scrutinizes 415 MFIs that have reported their social performance in the Microfinance Information Exchange (MIX)

database in 2008 and 2009. The findings have revealed that from 2008 to 2009 the number of MFIs reporting social performance increased by 72 per cent; 80 per cent of them are Non-governmental Organizations (NGOs) and Non-banking Financial Institutions (NFBIs). This study therefore provides direction for future research in performance assessment, balancing social and financial objectives in the microfinance industry. It is also a step in conducting more re-search and recommending regulation of the social performance of MFIs that will require them to engage in more empirical research work using micro-econometrics techniques in the future to support the available conceptual literature.

Number of Pages in PDF File: 8

Keywords: Microfinance institutions (MFIs), social performance, financial performance, non-governmental organisations (NGOs), non-banking financial institutions (NFBIs)


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