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Performance of microfinance institutions in the MENA region: a comparative analysis

Ines Ben Abdelkader (Institut Supérieur de Gestion de Sousse (ISG Sousse), University of Sousse, Sousse, Tunisia)
Faysal Mansouri (Department of Economics and Quantitative Methods, Institut des Hautes Etudes Commerciales de Sousse (IHEC Sousse), University of Sousse, Tunisia)

International Journal of Social Economics

ISSN: 0306-8293

Article publication date: 14 August 2018

Issue publication date: 7 January 2019

1185

Abstract

Purpose

The purpose of this paper is to provide preliminary efficiency assessment of Arab microfinance institutions (MFIs) within the period 2002–2012. Microfinance is defined as the provision of financial services to poor and low-income households and their microenterprises on a sustainable basis.

Design/methodology/approach

The authors first present the main features of microfinance in the Middle East and North Africa (MENA) region. Second, based on a simple of 72 microfinance institutions issued from ten countries of the region, they develop a bootstrap–data envelopment analysis (bootstrap–DEA) framework to measure Arab MFIs’ efficiency. Finally, they apply parametric and non-parametric tests to compare the performance and identify factors that contribute to the efficiency of Arab Islamic microfinance institutions.

Findings

Efficiency scores of the MENA region exhibit high variability, both across time and countries. Significant difference in efficiency was found due to MFI age or regulation. Results also reveal the ability of Arab MFIs to combine social and financial performance and their solidity in time of crisis.

Originality/value

In this paper, the authors apply DEA–bootstrap method on a large sample of Arab MFI with special look at the peer group differences. Unlike most previous relevant studies, the paper overcomes many of the drawbacks of the DEA method by using, in addition to the DEA–bootstrap approach, a test of return to scale and a combination of three procedures to detect outliers. Furthermore, this paper analyses the efficiency of MFI in the MENA region in the light of financial crises and Arab Spring.

Keywords

Acknowledgements

The authors of this paper have not made their research data set openly available. Any enquiries regarding the data set can be directed to the corresponding author.

Citation

Ben Abdelkader, I. and Mansouri, F. (2019), "Performance of microfinance institutions in the MENA region: a comparative analysis", International Journal of Social Economics, Vol. 46 No. 1, pp. 47-65. https://doi.org/10.1108/IJSE-06-2017-0242

Publisher

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Emerald Publishing Limited

Copyright © 2019, Emerald Publishing Limited

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