Determinants of the Performance of African Microfinance Institutions: An Analysis Panel Data

Determinants of the Performance of African Microfinance Institutions: An Analysis Panel Data

Mohamed Wajdi Triki (Department of Fiance and Accounting, F.S.E.G., Sfax, Tunisia) and Younes Boujelbene (F.S.E.G., Sfax, Tunisia)
Copyright: © 2014 |Pages: 14
DOI: 10.4018/ijsem.2014100105

Abstract

Performance evaluation is part of the chain of financial transparency which involves the production, verification, analysis, synthesis, dissemination and use of information on the financial performance of a micro-finance institution (MFI). In this study, the authors will try to show the convergence or divergence between social performance and the financial performance by answering the following question: are there to arbitration / compatibility between the two types of performance. To answer this question, this study will be organized in such manner the first section outlines a brief literature review of microfinance in terms of both welfarist approaches (social) and institutionalists. The second section describes the characteristics of the sample of 141 MFIs in 21 countries in the MENA region and Africa based on the year of 2005 and 2010. By defining the variables that identify each type of performance with a new index created for social performance called “Depth of Outreach” (noted DEPTH). The financial performance is described by financial indicators namely profitability, portfolio quality and productivity. The authors finish this study by a third section which presents the main results of a factor analysis applied to the sample in order to study the nature of relationship between the two types of performance.
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Introduction

Microfinance is gradually developing in Africa and especially the Middle East and North (MENA) Africa through micro-finance institutions varied.

The goal of most of these MFIs is to reconcile social performance that aims to reduce poverty and financial performance which aims to ensure long-term profitability.

The question arises: Are there arbitration or compatibility between these two types of performance? A factorial cross-sectional analysis on a sample of 141 MFIs in 26 countries in Africa and MENA examines the relationship between these two performances.

There is no arbitration for some MFIs that combine two performances which include determinants vary according to several indicators identified in our study.

For the poor excluded from the traditional financial system, microfinance can be a means of access to finance and improve their living conditions, it develops gradually in the MENA region through microfinance institutions (MFIs) varied (NGOs, cooperatives, non-bank financial institutions and banks) (Berguiga 2010) .

The duality between social performance and financial performance was well addressed using two approaches namely the welfarist and those institutionalists.

According to the institutionalist approach is more emphasis on financial self-sufficiency program that the amplitude of the depth of the program and the extent of the impact on customers.

While according to the approach of social welfare or welfarist resumes microfinance in a social setting to achieve the etiquette of the target population. Secondly, it looks at differences between people of the same company.

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