Journal of Business & Financial Affairs

Productivity Change in Microfinance Institutions in Sarrc Regio n: A Malmquist Productivity Index Approach

Abstract

Kiran Bibi and Sir Habib Ahmad

Microfinance Institutions (MFIs) play vital role in developing countries. This study is dedicated to inspect the productivity change in microfinance Institutions (MFIs) in the SAARC region. A panel of 85 MFIs with five diamond information status from 2003 to 2011 with annual frequency is investigated in the analysis. Inputs and outputs used in the study are selected on the basis of double bottom line objective of MIF; s. the methodology which we adopt is Malmquist index through DEA software. The study will be helpful to find that whether the MFIs of SAARC countries effectively manage cost efficiency, technical efficiency and scale efficiency? Also the study will guide the MFIs to remove the deficiency (If any) in the above said forms of efficiencies. Also the total productivity change with respect time and country is investigated in the analysis. On average a positive TFP growth of MFIs in the SAARC region is documented except from 2005 to 2006 and 2007 to 2009. The efficiency of these MFIs will be helpful for completion of the financial sector  and will improve the overall competence and growth. The study will be helpful for both welfarist and institutionalisms to achieve their objectives. We found many article related to measure the productivity change in different region but there is limited articles and research work related on SARRC region. This study has been carried out to find either Micro finance institutions are working efficiently or not.