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

See all articles by Andrew Crawford

Andrew Crawford

Monash University - Department of Banking and Finance; Cambodia Microfinance Association

Michael T. Skully

Monash University - Department of Banking and Finance; Financial Research Network (FIRN)

David W.L. Tripe

Massey University - School of Economics and Finance

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

Suggested Citation

Crawford, Andrew and Skully, Michael T. and Tripe, David W.L., Are Profitable Microfinance Programs Less Efficient at Reaching the Poor? A Case Study in Cambodia (February 25, 2014). Available at SSRN: https://ssrn.com/abstract=1968280 or http://dx.doi.org/10.2139/ssrn.1968280

Andrew Crawford

Monash University - Department of Banking and Finance ( email )

Melbourne
Australia

Cambodia Microfinance Association ( email )

69 Street Berk Thmey
Sangkat Tom Nop Tek, Khan Chamkarmon
Phnom Penh
Cambodia

HOME PAGE: http://www.cma-network.org

Michael T. Skully

Monash University - Department of Banking and Finance ( email )

900 Dandenong Road
Caulfield East, Victoria 3145
Australia
+61 3 9903 2407 (Phone)
+61 3 9903 1443 (Fax)

Financial Research Network (FIRN)

C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia

HOME PAGE: http://www.firn.org.au

David W.L. Tripe (Contact Author)

Massey University - School of Economics and Finance ( email )

Private Bag 11-222
Palmerston North, 30974
New Zealand

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