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Social and financial efficiency of Islamic microfinance institutions: A Data Envelopment Analysis application
Affiliation:1. Department of Mathematics, Qaemshahr Branch, Islamic Azad University, Qaemshahr, Iran;2. Business Systems and Analytics Department, Lindback Distinguished Chair of Information Systems and Decision Sciences, La Salle University, Philadelphia, PA 19141, USA;3. Business Information Systems Department, Faculty of Business Administration and Economics, University of Paderborn, D-33098 Paderborn, Germany;4. Department of Mathematics, Science and Research Branch, Islamic Azad University, Tehran, Iran;5. Department of Management, Qazvin Branch, Islamic Azad University, Qazvin, Iran;1. STIE STAN Indonesia Mandiri, Bandung, 40272, Indonesia;2. Management Science Doctoral Program, University of Brawijaya, Malang, Indonesia;1. LEREPS, Université de Toulouse, France;2. CRES (Consortium for Economic and Social Research), Dakar, Senegal;3. Université Paris Dauphine, PSL Research University, IRD, LEDa, UMR [225], DIAL, 75016 Paris, France;4. Université Cheikh Anta Diop de Dakar, CRES, Senegal;5. Université Cheikh Anta Diop de Dakar, Senegal;1. Department of Development Studies, Faculty of Economics and Administration, University of Malaya, 50603 Kuala Lumpur, Malaysia;2. Department of Economics, Faculty of Economics and Administration, King Abdul-Aziz University, Jeddah, Saudi Arabia;1. Northwest University, China;2. University of Groningen, the Netherlands;3. Copernica, the Netherlands
Abstract:Microfinance has been developed as alternative solution for global poverty alleviation effort in the last 30 years. Microfinance institution (MFI) has unique characteristic wherein they face double bottom line objectives of outreach to the poor and financial sustainability. This study proposes a two-stage analysis to measure Islamic Microfinance institutions (IMFIs) performance by comparing them to conventional MFIs. First, we develop a Data Envelopment Analysis (DEA) framework to measure MFIs' efficiency in its double bottom line objectives, i.e. in terms of social and financial efficiency. In the second stage non-parametric tests are used to compare the performance and identify factors that contribute to the efficiency of IMFIs and MFIs.
Keywords:Data Envelopment Analysis  Islamic microfinance  Microfinance institutions  Efficiency  Performance measurement
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