About the Book

The goal of microfinance institutions (MFIs) is to help the poor to cope better with risk, take advantage of small income generating opportunities and empower themselves through organization. To have this impact on an increasing number of people MFIs need to be financially sound and sustainable. This volume argues that while there may be situations where MFIs can go up-scale and thus meet both objectives at the same time, there are other market configurations where it is very difficult or even impossible for an institution to break even, no matter how efficiently it runs its operations. This is particularly the case in rural, remote and sparsely populated areas.

To take account of the variety of market and contextual constraints, this book argues that public policy should be guided by efficiency, being an overarching criterion accommodating different combinations of financial performance and social impact. A valuable contribution to the debate surrounding the performance and sustainability of microfinance, this volume examines the concept of efficiency in financial intermediation, how it is measured and how public policy can be geared to provide incentives to efficiency gains. The argument is illustrated by an empirical analysis of 45 MFIs from around the world.

Contents

Efficiency and Sustainability in Microfinance

Bernd Balkenhol

Conceptual Framework

Poverty versus Inequality

Amadou Diop, Isabelle Hillenkamp, Jean-Michel Servet

Poverty Reduction through Microfinance: A Capability Perspective

Flavio Comim

Achieving Poverty Outreach, Impact and Sustainability: Managing Trade-offs in Microfinance

Anton Simanowitz

Smart Subsidies

Jonathan Morduch

Empirical Analysis

Efficiency in Microfinance Institutions: An Application of Data Envelopment Analysis to MFIs in Peru

Yves Flückiger, Anatoli Vassiliev

Efficiency in Financial Intermediation: Theory and Empirical Measurement

Thorsten Beck

Efficiency Drivers and Constraints: Empirical Findings

Yousra Hamed

Measuring the Performance of MFIs: An Application of Factor Analysis

Giovanni Ferro Luzzi, Sylvain Weber

Selected Country Studies

Contextual Factors Determining Poverty Outreach and Financial Performance: The Case of Mali

Renata Serra, Fabrizio Botti, Milasoa Cherel-Robson

Contextual Factors Determining Poverty Outreach and Financial Performance: The Case of Morocco

Saâd Filali Meknassi

Contextual Factors Determining Poverty Outreach and Financial Performance: The Case of Eastern Europe and Central Asia

Justyna Pytkowska

Auctioning Subsidies: Chile’s ‘Access to Credit Program’

Vito Sciaraffia Merino

Policy Implications

Bernd Balkenhol

About the Author / Editor

Bernd Balkenhol is director of the Social Finance program at the International Labor Office.