Establishing microfinance efficiency and its determinants through data envelopment analysis and Tobit regression: Evidence from select Philippine microfinance institutions

• Main Authors: Bordeos, Lea, Salvanera, Rica, Soriano, Inigo, Villanoy, Leah
• Format: text
• Language: English
• Published: Animo Repository 2011
• Subjects: Microfinance > Philippines; Financial institutions > Philippines; Finance and Financial Management
• Online Access: https://animorepository.dlsu.edu.ph/etd_bachelors/18412
• Institution: De La Salle University

The purpose of this study is to analyze the relative technical efficiency of chosen microfinance institutions (MFIs) in the Philippines with the use of data envelopment analysis (DEA) to calculate the efficiency scores, and to determine the factors that affect the differences in efficiency with the use of Tobit regression. DEA found a large portion of the sample MFIs to be efficient while the Tobit regression showed that the factors influencing MFI technical efficiency are: average loan balance per borrower, age of the institution, and ratio of gross loan portfolio to total assets. The results lead to the belief that most of the institutions included in the sample opt for sustainability (represented by average loan size) as a measure of efficiency rather than outreach (represented by number of borrowers).