Compatibility between Outreach and Efficiency in the Microfinance Market

Abstract: The aim of this thesis is to investigate whether there existed a trade-off between outreach to the poor and efficiency of MFIs between year 2000 and 2010. The study is conducted on a sample of 1679 observations from countries worldwide and is analyzed through Stochastic Frontier Analysis. The results from this study suggest that there was indeed a negative correlation between outreach to the poor and efficiency of MFIs, as have been found in previous studies. Although, this study also suggests that a high percentage of women borrowers not necessarily have to be positively correlated with a higher level of inefficiency, which is a new finding.