Are Profitable Microfinance Programs Less Efficient at Reaching the Poor? A Case Study in Cambodia
36 Pages Posted: 5 Dec 2011 Last revised: 28 Feb 2014
Date Written: February 25, 2014
Abstract
We examine the relations between the financial and outreach efficiency of Cambodian microfinance institutions (MFIs). Data Envelopment Analysis (DEA) finds that commercially focused MFIs are no less efficient at reaching the poor than non-profit ones. Larger MFIs appear as efficient at reaching the poor while smaller MFIs can also be highly profitable. Overall Cambodian MFIs have become less outreach efficient while increasing their profitability. This could reflect a shift in some MFIs to improve their financial efficiency rather than serving the most clients. Our findings confirm that financial and outreach objectives are not mutually exclusive but do not always coincide.
Keywords: Microfinance institutions, Cambodia, Data Envelopment Analysis, Efficiency
JEL Classification: G21
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