Evaluating the performance of microfinance systems
Raghunathan, Uthra Kalyani
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This thesis consists of three studies that address the e ciency of micro nance institutions (MFIs) and their borrowing groups. The rst study utilizes a Bayesian distance function to analyze the e ciency of MFIs, and their dualistic goals (outputs) of pro tability and outreach. Results suggest that MFIs are generally e cient, with gross loan portfolio and funding signi cantly in uencing the outputs. The second study uses a Bayesian stochastic frontier to estimate the e ciency of an MFI's borrowing groups. Results suggest that the rate-of-repayment (output) is a ected by the interest rate and number of members in a group, while agricultural loans do not fare any di erent from small-business loans. The third study determines which explanatory variables a ect the e ciency of MFI's through the use of a Bayesian technical e ects model. The results indicate that agricultural loans in the loan portfolio are signi cantly and positively correlated with the e ciency of MFIs.