How Productive Are the Microfinance Institutionsin Bangladesh? An Application of Malmquist Productivity Index

2021 ◽  
pp. 232102222110244
Author(s):  
Md. Sohel Rana ◽  
Hasanul Banna ◽  
Md Aslam Mia ◽  
Izlin Binti Ismail ◽  
Mohd Nazari Bin Ismail
Keyword(s):  
Information Exchange ◽  
Poverty Reduction ◽  
Secondary Data ◽  
Malmquist Productivity Index ◽  
Productivity Index ◽  
Microfinance Institutions ◽  
Average Growth ◽  
Entire Study ◽  
Development Goals ◽  
Dual Objectives

The poverty reduction and financial inclusion of Sustainable Development Goals (SDG) by 2030 can be significantly facilitated by the microfinance industry. However, it is pertinent to assess the sustainability of microfinance institutions (MFIs) in serving this purpose. The estimation of productivity of MFIs in Bangladesh gives a glimpse of their ability to fulfil the dual objectives of financial sustainability and social outreach. Hence, this study aims to measure the productivity of MFIs in Bangladesh using secondary data obtained from the Microfinance Information Exchange (MIX) market. The study employs Malmquist Productivity Index (MPI), which is an extension of the Data Envelopment Analysis (DEA) to estimate the overall, social and financial productivities of 26 MFIs in Bangladesh during the period from 2009 to 2018. In general, this study revealed that majority of the MFIs’ overall productivity score varies between 0.9 and 1.20. Moreover, we observed that the social and financial productivities of MFIs in Bangladesh progressed during the entire study period, except for the years 2011 and 2017. This development may be attributed to the average growth in catch-up and technological effect witnessed during the study period. The study has also applied sensitivity analysis by changing the output to evaluate the robustness of the overall productivity results; consequently, the new estimates followed a similar pattern (mostly) and further corroborate the outcomes of this study. JEL Codes: C14, O43, G21

scholarly journals Efficiency Analysis of Microfinance Institutions in Bangladesh: Does Regulation Matter?

2020 ◽  
Vol 5 (2) ◽  
Author(s):  
Farhana Ferdousi
Keyword(s):  
Efficiency Analysis ◽  
Malmquist Productivity Index ◽  
Productivity Index ◽  
Data Envelopment ◽  
Microfinance Institutions ◽  
Tobit Regression ◽  
Productivity Increase ◽  
Before And After ◽  
Tools And Techniques ◽  
Productive Growth

The aim of this study is to measure efficiency of various Microfinance Institutions (MFIs) in Bangladesh before and after introducing Microcredit Regulatory Authority (MRA) in order to capture the immediate impact of regulation. Data Envelopment Analysis (DEA) and Malmquist Productivity index technique have been used for this study. Findings reveal that 35% firms’ average productivity increase sharply after enacting microfinance regulation. Seven firms have been graduated from the inefficiency level to efficiency level. However, most of the firms among the increased efficiency list are comparatively young in terms of starting their microfinance operations. Result of Tobit regression does not find any significant relationship between efficiency and regulation. Due to regulation, only number of outreach increases but to ensure more productive growth, MRA needs to be more proactive in strengthening policy environment and educating MFIs to be better equipped with sound financial and managerial tools and techniques.

scholarly journals Productivity Change of Microfinance Institutions in Bosnia and Herzegovina

2019 ◽  
Vol 14 (2) ◽  
pp. 23-33
Author(s):  
Velid Efendić ◽  
Nejra Hadžiahmetović
Keyword(s):  
Total Factor Productivity ◽  
Bosnia And Herzegovina ◽  
Malmquist Productivity Index ◽  
Productivity Index ◽  
Productivity Change ◽  
Microfinance Institutions ◽  
Factor Productivity ◽  
Strategic Objectives ◽  
Average Decrease ◽  
Recent Financial Crisis

Abstract The main aim of this paper is to investigate the productivity changes of microfinance institutions (MFIs) in Bosnia and Herzegovina (BiH) during and after the recent financial crisis. The study covers the period starting from 2008 until 2015. Using the Malmquist Productivity Index (MPI) over the sample of 10 MFIs and a balanced panel dataset of 80 observations, this study explores technical and technological change as well as total factor productivity (TFP) change. The empirical findings indicate a decline in TFP in most of the analyzed periods with an average decrease of 2.5%. The study reveals an average technological decline in the industry of 1.7%, while technical efficiency change is recorded at the level of -0.8%. Overall, crisis efficiency recovery occurred during the period between 2009 and 2013. However, due to technological inefficiencies, average total factor productivity change remains negative. Hence, policy makers need to enhance the technological progress in order to meet their strategic objectives in BiH MFIs.

Technological Change and Innovations in Microfinance Institutions: What Matters?

2020 ◽  
pp. 097215092092736
Author(s):  
Md Aslam Mia
Keyword(s):  
Technological Change ◽  
Financial Services ◽  
Technological Progress ◽  
Service Providers ◽  
Malmquist Productivity Index ◽  
Productivity Index ◽  
Institutional Characteristics ◽  
Microfinance Institutions ◽  
Macroeconomic Factors ◽  
Second Stage

Usage of technology that serves to improve organizational efficiency among financial service providers has substantially increased during the past decade. Similarly, a large number of microfinance institutions (MFIs) have incorporated technological innovation in their operations to provide clients with better financial services. To understand the determinants of technological change in MFIs, this study investigated various factors, including sources of funds, institutional characteristics (IC) and macroeconomic factors. Using longitudinal data (2009–2014) from the microfinance industry in Bangladesh, this study estimated the Malmquist Productivity Index (non-parametric) to decompose the technological change at the first stage. This index was then used as a dependent variable in the second stage to regress against certain independent variables. Overall, it was found that the microfinance industry in Bangladesh observed regression in technological change; however, technological change could be improved by promoting peer borrowing among MFIs. Apart from that, greater autonomy through decentralization of MFI branches could also stimulate technological progress. Interestingly, MFIs located in Dhaka have experienced better technological progress than MFIs located in other parts of the country, which signifies the importance of location. Additionally, the findings also revealed a gap in transfer of technological knowledge from commercial banks to the MFIs that they fund.

scholarly journals Productivity Comparation of Islamic and Conventional Banks in Indonesia

2020 ◽  
Vol 4 (1) ◽  
pp. 69
Author(s):  
Marhanum Che Mohd Salleh ◽  
Lina Nugraha Rani
Keyword(s):  
Technological Change ◽  
Total Factor Productivity ◽  
Banking Industry ◽  
Secondary Data ◽  
Financial Statements ◽  
Malmquist Productivity Index ◽  
Productivity Index ◽  
Islamic Banks ◽  
Factor Productivity ◽  
Conventional Banks

This study aimed to compare the productivity performance of Islamic and Conventional Banks in Indonesia with the Total Factor Productivity Index (TFPCH) indicator. The sample of this study was 14 banks consisting of 7 Islamic Banks and 7 Conventional Banks from 2011-2018. Secondary data were obtained from the annual financial statements of each sample. To measure the total factor productivity index (TFPCH), the Malmquist Productivity Index (MPI) was used as a measure of productivity. It found that the productivity of Conventional Banks was slightly superior compared to Islamic Banks, with contributions from Technical / Technological Change (TECHCH) being the most influential component in the TFPCH composition. Further, there was an indication of a technical increase in both types of banks during the period. The results of this study implied banking industry players to increase their efficiency particularly the usage of technology in providing efficient services to users.

Productivity Growth and Efficiency Differences in Indian Manufacturing Sector: An Inter-State Analysis

2020 ◽  
pp. 43-50
Keyword(s):  
Technical Efficiency ◽  
Productivity Growth ◽  
Manufacturing Sector ◽  
Value Added ◽  
Malmquist Productivity Index ◽  
Productivity Index ◽  
Indian States ◽  
Entire Study ◽  
Indian Manufacturing Sector ◽  
Inter State

ABSTRACT The present study endeavours to analyze the productivity growth and technical efficiency of Indian manufacturing sector both at aggregate and disaggregate inter-state level by taking into account the entire study period of 35 years from 1980-81 to 2014-15 and three distinct sub-periods viz., (i) Pre-reforms period (1980-81 to 1990-91: Period-I) ii) Post-reforms period Phase-I (1991-92 to 2000- 2001: Period-II) and iii) Post- reforms period Phase-II (2001-02 to 2014-15: Period-III).The study utilizes the single output (gross value added) and two inputs (gross fixed capital stock and total employees) framework and employed Data Envelopment Analysis (DEA) approach to compute the total factor productivity growth and technical efficiency scores of sixteen major Indian states. The comparative analysis of pre-reforms and post-reforms period depicted a slower TFP growth in the post-reforms era as compared to the pre-reforms period. Further, a non-parametric decomposition of the Malmquist Productivity Index (MPI) into its two components revealed that both before and after reforms, technological progress rather than technical efficiency change contributed more towards the productivity growth of manufacturing sector of these Indian states.

China’s Progress in Poverty Reduction: What Can South Africa Learn from China to Attain the Poverty Eradication Goal in the Sustainable Development Goals?

2018 ◽  
Vol 10 (6) ◽  
pp. 91
Author(s):  
Mandla Abednico Mubecua
Keyword(s):  
South Africa ◽  
Poverty Alleviation ◽  
Millennium Development Goals ◽  
Poverty Reduction ◽  
Sustainable Development Goals ◽  
Secondary Data ◽  
Poverty Eradication ◽  
The Sustainable Development ◽  
Development Goals ◽  
Poverty Levels

During the evaluation of the Millennium Development Goals (MDGs) from 2000 to 2015, it was discovered that there was no country managed to meet the envisioned goal of eradicating poverty. However, it was observed that China is the only country that managed to half its poverty levels. Just like other developing countries, South Africa is one of the countries whose performance in the attainment of the first goal of MDGs was not satisfactory. Through the utilization of secondary data in a qualitative approach, this paper argues that South Africa can perform better if it can learn and follow the strategies used by China to shrink its poverty levels. The study shows that China mostly supports State Owned Enterprises, which make the economy to grow and help in poverty alleviation. For that reason, the study recommends that in order for South Africa to attain the poverty eradication goal by 2030 more SOEs have to be established.

Joint Liability Lending, Entrepreneurial Development, and Poverty Reduction

2019 ◽  
pp. 222-240
Author(s):  
Christopher Boachie
Keyword(s):  
Significant Relationship ◽  
Poverty Reduction ◽  
Secondary Data ◽  
Survey Study ◽  
Microfinance Institutions ◽  
Cross Sectional Survey ◽  
Cross Sectional ◽  
Joint Liability ◽  
Entrepreneurial Development ◽  
And Training

The purpose of this chapter is to examine the effect of joint liability lending on micro businesses in Madina municipality. Joint liability lending has become a popular and fashionable word in financial and development circles. It is a cross-sectional survey study and used both primary and secondary data on joint liability lending. The study reveals that joint liability lending improves entrepreneurship and reduces poverty. There exists a significant relationship between joint liability lending and a high repayment rate. The implications are that individual within the group are encouraged to continue saving and microfinance institutions should continue investing in educating and training clients to improve upon their micro businesses.

Joint Liability Lending, Entrepreneurial Development, and Poverty Reduction

2016 ◽  
pp. 279-297
Author(s):  
Christopher Boachie
Keyword(s):  
Significant Relationship ◽  
Poverty Reduction ◽  
Secondary Data ◽  
Survey Study ◽  
Microfinance Institutions ◽  
Cross Sectional Survey ◽  
Cross Sectional ◽  
Joint Liability ◽  
Entrepreneurial Development ◽  
And Training

The purpose of this chapter is to examine the effect of joint liability lending on micro businesses in Madina municipality. Joint liability lending has become a popular and fashionable word in financial and development circles. It is a cross sectional survey study and used both primary and secondary data on joint liability lending. The study reveals that joint liability lending improves entrepreneurships and reduces poverty. There exist a significant relationship between joint liability lending and a high repayment rate. The implications are that individual within the group are encouraged to continue saving and microfinance institutions should continue investing in educating and training clients to improve upon their micro businesses.

Social Performance of Microfinance Institutions (MFIs): Does Existing Practice Imply a Social Objective?

2013 ◽  
Vol 2 (2) ◽  
pp. 173 ◽  
Author(s):  
Sujani Thrikawala ◽  
Stuart Locke ◽  
Krishna Reddy
Keyword(s):  
Information Exchange ◽  
Social Performance ◽  
Empirical Studies ◽  
Research Work ◽  
Future Research ◽  
Microfinance Institutions ◽  
Performance Measurements ◽  
Social Objective ◽  
Development Goals ◽  
Traditional Performance

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 organisation’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 scrutinises 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 Organisations (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 research 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.

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