Financial vs Social Efficiency of Indian MFIs

Abstract

MFIs were established with the main objective of poverty alleviation but it is to be analysed whether they fulfil the object of poverty alleviation by extending efficiency in social outreach or only fulfilling their financial efficiency by neglecting social efficiency objective. The present study intends to study the objectives to  find out social efficiency of financially efficient  Indian MFIs and to compare the financial and social efficiency of profit-for and non-profit  Indian MFIs.  Five diamond Indian MFIs which were registered in Mix Market were selected for the present study.  The data set covers 10 years period from the financial years from 2004 to 2013.    The present study analysis the financial and social efficiencies of MFIs under three forms using DEA analysis by using   inputs as equity and operating expenses and outputs for  financial efficiency as Deposits and Gross Loan Portfolios while uses, Depositors and Borrowers for analysing the social efficiency of MFIs. The study found that financially efficient MFIs are performing equally well in their social efficiency and the MFIs which are less than 100 per cent in their  financial efficiency their preference is primarily to stabilise financial efficiency over social efficiency. It is also found that almost all non-profit MFIs are better in their social efficiency than their financial efficiency.