A Systematic Review of Microfinance Multifaceted Efficiency Indicators

Abstract:

An efficient microfinance institutions (MFIs) should be able to promote dual objectives, which include social and financial efficiencies to ensure the overall performance of MFI operation. Thus, selecting appropriate indicator is deem essential to measure both social and financial efficiency of MFI. Majority of the previous studies had only focus on the social and financial efficiency as main factors, but less research was directed towards the selection indicators for both factors mention. Therefore this research was set to examine primary studies on social and financial efficiency indicator used in single and multi-countries. Guided by the PRISMA Statement (Preferred Reporting Items for Systematic Reviews and Meta- Analysis) review method and a systematic review, findings reveal that, there is difference indicator apply according to sources of data, the method used, and the goals of MFIs studied within two primary method; non-DEA and DEA application. Non-DEA method extensively applied the breadth of outreach, depth of outreach, the scope of awareness, profitability, revenue and portfolio quality to measure social and financial in measuring social and financial efficiency. 

This paper will focus on the discussion of the number of employee and operating expenses that are applied as input, while financial revenue and gross loan portfolio were applied as output to measure financial efficiency. The input used to measure both social and financial efficiency was the same. Several recommendations are highlighted related to social and financial indicator selection for future studies.