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The Measurement and Determinants of Economic Efficiency of Microfinance Institutions in Ghana: A Stochastic Frontier Approach

African Review of Economics and Finance

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Title The Measurement and Determinants of Economic Efficiency of Microfinance Institutions in Ghana: A Stochastic Frontier Approach
 
Creator Oteng-Abayie, EF
Amanor, K
Frimpong, JM
 
Subject —
 
Description Microfinance institutions have become central players in socio-economic development especially in developing countries. This paper investigates empirically the economic efficiency of microfinance institutions in Ghana using a Cobb-Douglas Stochastic frontier model. A total of 135 MFIs were sampled for the period from 2007-2010. The underpinning assumption is that there is a possibility for economies of scale in lending if only firms improve strategies of mobilizing savings and provide good quality service to their clients. The estimated results showed an overall average economic efficiency of 56.29%; indicating a high degree of inefficiency in the economic behaviour of the units in the industry. The study further exposed that age and savings indicators of outreach and productivity, and cost per borrower were significant determinants of economic efficiency. It is therefore recommended that practitioners improve upon technical training programmes, operate diversified savings products to improve on portfolio quality and ensure sustainability; and also heighten the extent of social commitment to both staff and clients
 
Publisher Rhodes University
 
Contributor —
 
Date 2013-03-28
 
Type info:eu-repo/semantics/article
info:eu-repo/semantics/publishedVersion
Peer-reviewed Article
 
Format application/pdf
 
Identifier https://www.ajol.info/index.php/aref/article/view/86953
 
Source African Review of Economics and Finance; Vol 2, No 2 (2011); 149-166
2042-1478
 
Language eng
 
Relation https://www.ajol.info/index.php/aref/article/view/86953/76731
 
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