THE DETERMINANTS OF MICROFINANCE INSTITUTIONS EFFICIENCY: THE ROLE OF WOMEN BORROWERS

Abstract

Microfinance institutions (MFIs) are instrumental in enabling the economic empowerment of women. We examine the efficiency and performance of 84 Indian MFIs from 2016 to 2018 using a two-stage double bootstrap approach. Our results show that MFIs with increased outreach and actively target female borrowers achieve higher efficiency. Furthermore, we find larger MFIs and higher leverage intensity to be positively associated with efficiency. Government policies should be encouraged to support current MFIs to grow larger, actively target female borrowers and increase outreach to the poor to support India’s financial inclusion agenda and facilitate the economic empowerment of women whist revitalizing less efficient MFIs.