Title: Impact of country governance dimensions to the microfinance institutions' efficiency

Authors: Nazratul Aina Mohamad Anwar; Fakarudin Kamarudin; Hafezali Iqbal Hussain; Khar Mang Tan; Nurazilah Zainal

Addresses: Faculty of Economics and Muamalat, Universiti Sains Islam Malaysia, Bandar Baru Nilai, 71800 Nilai, Negeri Sembilan, Malaysia ' School of Business and Economics, Universiti Putra Malaysia, 43400 Serdang, Selangor Darul Ehsan, Malaysia ' Faculty of Business and Law, Taylor's Business School, Taylor's University, Taylor's Lakeside Campus, 1 Jalan Taylor's, 47500 Subang Jaya, Selangor Darul Ehsan, Malaysia; University of Economics and Human Science, Okopowa 59, 01-043 Warsaw, Poland ' School of Economics and Management, Xiamen University Malaysia, 43900 Sepang, Selangor Darul Ehsan, Malaysia ' Faculty of Business Management, Universiti Teknologi MARA (UiTM), 70300, Seremban Campus, Malaysia

Abstract: The main purpose of this study is to examine the impact of two dimensions of country governance namely: 1) voice and accountability; 2) political stability and absence of violence to the social efficiency and financial efficiency of microfinance institutions (MFIs). Besides, this study also investigates the potential of MFIs specific characteristics and macroeconomic that may influence MFIs' efficiency. The present study gathers data on a total of 142 MFIs from the Philippines and Indonesia over the period 2011 to 2017. Overall, the results implied that, during the period of the study, although the MFIs had been operating on a relatively optimal scale, they were managerially inefficient to exploit their resources to the fullest in the view of both social efficiency and financial efficiency. This information could be useful to several parties and have several implications for MFIs, policymakers, investors and researchers to improve the efficiency level of MFIs.

Keywords: microfinance institutions; MFIs; voice; accountability; political stability; absence of violence; social efficiency; financial efficiency.

DOI: 10.1504/IJBEM.2021.116632

International Journal of Business and Emerging Markets, 2021 Vol.13 No.3, pp.308 - 336

Received: 29 Sep 2019
Accepted: 03 Jan 2021
Published online: 28 Jul 2021 *

Full-text access for editors Full-text access for subscribers Purchase this article Comment on this article