Impact of Women Borrowers Culture on the Financial Efficiency of Microfinance Institutions in ASEAN-4 Countries

Eni Murdiati (1) , Nurazilah Zainal (2) , Achmad Syarifudin (3) , Zuraidah Mohd Sanusi (4) , Zahari Md Rodzi (5)
(1) Da'wah and Communication, Universitas Islam Negeri Raden Fatah Palembang, South Sumatera , Indonesia
(2) Faculty of Business and Management & Accounting Research Institute, Universiti Teknologi MARA, Negeri Sembilan Branch , Malaysia
(3) Da’wah and Communication, Universitas Islam Negeri Raden Fatah Palembang , Indonesia
(4) Accounting Research Institute, Universiti Teknologi MARA, Shah Alam, , Malaysia
(5) Faculty of Computer Science and Mathematic, Universiti Teknologi MARA, Negeri Sembilan Branch, Seremban Campus , Malaysia

Abstract

This paper examines the impact of women borrowers' culture on the financial efficiency of microfinance institutions (MFIs) between the years 2011 to 2019. The sample data consisted of 90 MFIs from ASEAN-4 countries. As the first stage analysis, data envelopment analysis (DEA) was employed to determine the score of financial efficiency for the MFIs. In the second stage, Multivariate Panel Regression Analysis were used to examine the impact of women borrower on the level of financial efficiency of the MFIs. The findings reveal that Cambodia has the highest financial efficiency score in ASEAN 4. This indicates that the MFIs in Cambodia are sustainable in providing financial services to the poor in the long run. Moreover, the findings also found a positive relationship between women borrowers culture and the efficiency of the MFIs, which implies that women borrowers reduce the risk of default, thus confirming that women have better loan repayment rates than male borrowers. The outputs from this study provide new insights for the stakeholder of the MFIs as well as policymakers to develop a strategy in order to promote the continuous development of the MFIs.

Full text article

Generated from XML file

References

Abdullah, S., & Quayes, S. (2016). Do Women Borrowers Augment Financial Performance of MFIs? Applied Economics, 48(57), 5593–5604. https://doi.org/10.1080/00036846.2016.1181831

Agier, I., and Szafarz, A. (2013). Microfinance and Gender: Is There a Glass Ceiling on Loan Size? World Development, 42(1), 165–181. https://doi.org/10.1016/j.worlddev.2012.06.016.

Armendariz, B. A. D., and Morduch, J. (2005). The Economics of Microfinance. Cambridge, MA: MIT Press.

Banker, R. D., Charnes, A., & Cooper, W. W. (1984). Some Models for Estimating Technical and Scale Inefficiencies in Data Envelopment Analysis. Management Science, 30(9), 1078–1092. https://doi.org/10.1287/mnsc.30.9.1078

Boussofiane, A., Dyson, R. G., & Thanassoulis, E. (1991). Applied data envelopment analysis. European Journal of Operational Research, 52(1), 1–15. https://doi.org/10.1016/0377- 2217(91)90331-O

Brehanu, A., and Fufa, B. (2008). Repayment Rate of Loans from Semiformal Financial Institutions among Small-Scale Farmers in Ethiopia: Two-Limit Tobit Analysis. The Journal of Socio-Economics 37(6) 2221–2230. https://doi.org/10.1016/j.socec.2008.02.003.

Charnes, A., Cooper, W. W., & Rhodes, E. (1978). Measuring the efficiency of decision-making units. European Journal of Operational Research, 2(6), 429–444. https://doi.org/10.1016/0377-2217(78)90138-8

Coelli, T., Prasada Rao, D. S., & Battese, G. (1998). An Introduction to Efficiency and Productivity Analysis, 3(2). Kluwer Academic Publishers. https://doi.org/10.1007/978-1-4615-5493-6

Cooper, W. W., Seiford, L. M., & Tone, K. (2007). Data Envelopment Analysis: A Comprehensive Text with Models, Applications, References and DEA-Solver Software (2nd edi). Springer US. https://doi.org/10.1007/978-0-387-45283-8

D’Espallier, B., I. Guerin, and Mersland, R. (2011). Women and Repayment in Microfinance: A Global Analysis. World Development, 39(5), 758–772. https://doi.org/10.1016/j. worlddev.2010.10.008

Farrell, M. J. (1957). The Measurement of Productive Efficiency. Journal of the Royal Statistical Society. Series A (General), 120(3), 253–290. https://doi.org/10.2307/2343100

Garikipati, S. (2008). The Impact of Lending to Women on Household Vulnerability and Women’s Empowerment: Evidence from India. World Development, 36(12), 2620–2642. https://doi.org/10.1016/j.worlddev.2007.11.008

Gibbons, D., and Kasim, S. (1991). Banking on the Rural Poor Center for Policy Research. Malaysia: University Sains.

Godquin, M. (2004). Microfinance Repayment Performance in Bangladesh: How to Improve the Allocation of Loans by Mfis. World Development, 32(11), 1909–1926. https://doi.org/10.1016/j.worlddev.2004.05.011

Gujarati, D. N. (2004). Basic Econometric, Fourth Edition. In The McGraw-Hill Companies. The McGraw-Hill Companies.

Hartmann-Wendels, T. (2009). Determinants of Banks’ Risk Exposure to New Account Fraud–evidence from Germany. Journal of Banking &Amp; Finance, 33(2), 347–357. https://doi.org/10.1016/j.jbankfin.2008.08.005

Hassan, M. K., Sanchez, B., & Ngene, G. (2012). Scales and technical efficiencies in Middle East and North African (MENA) micro-financial institutions. International Journal of Islamic and Middle Eastern Finance and Management, 5(2), 157–170. https://doi.org/10.1108/mf.2008.00934jaa.001

Hermes, N., Lensink, R., & Meesters, A. (2011). Outreach and Efficiency of Microfinance Institutions. World Development, 39(6), 938–948. https://doi.org/10.1016/j.worlddev.2009.10.018

Hossain, M. (1988). Credit for Alleviation of Rural Poverty: The Grameen Bank of Bangladesh (Vol. 65). Institute Research Report. Washington, DC: International Food Policy Research.

Hulme, D. (1991). The Malawi Mudzi Fund: Daughter of Grameen. Journal of International Development, 3(3), 427–431. https://doi.org/10.1002/jid.4010030315

Hulme, D., and Mosley, P. (1996). Finance against Poverty. London; New York: Routledge.

Hussain, H. I., Kot, S., Kamarudin, F., & Yee, L. H. (2021). Impact of Rule of Law and Government Size to the Microfinance Efficiency. Economic Research-Ekonomska Istrazivanja , 34(1), 1870–1895. https://doi.org/10.1080/1331677X.2020.1858921

Jubilee, R. V. W., Kamarudin, F., Hussain, H. I., Latiff, A. R. A., & Zainal, N. (2020). Analysis of total factor productivity changes in islamic and conventional banks: Empirical evidence from three regions. International Journal of Management and Sustainability, 9(3), 161–180. https://doi.org/10.18488/journal.11.2020.93.161.180

Kamarudin, F., Sufian, F., Md. Nassir, A., & Mohamad Anwar, N. A. (2015). Technical Efficiency and Returns to Scale on Banking Sector: Empirical Evidence from GCC Countries. Pertanika Journal of Social Sciences and Humanities, 23(9), 219–236.

Kevane, M., and Wydick, B. (2001). Microenterprise Lending to Female Entrepreneurs: Sacrificing Economic Growth for Poverty Alleviation?. World Development, 29(7), 1225–1236. https://doi.org/10.1016/S0305-750X(01)00032-8

Khandker, S. R., B. Khalily, and Kahn, Z. (1995). Grameen Bank: Performance and sustainability. World Bank Discussion Paper 306. Washington, DC: World Bank Publications.

Liv, D. (2013). Study on the drivers of over-indebtedness of microfinance borrowers in Cambodia: An in-depth investigation of saturated areas. Cambodia Institute of Development Study, Final Report, 1–83. http://www.blueorchard.com/wp-content/uploads/2013/05/OID-Final-Report.pdf

McDonald, J. (2009). Using least squares and tobit in second stage DEA efficiency analyses. European Journal of Operational Research, 197(2), 792–798. https://doi.org/10.1016/j.ejor.2008.07.039

Morduch, J. (2000). The Microfinance Schism. World Development, 28(4), 617–629. https://doi.org/10.1016/S0305-750X(99)00151-5

Nourani, M., Malim, N. A. K., & Mia, M. A. (2021). Revisiting efficiency of microfinance institutions (MFIs): an application of network data envelopment analysis. Economic Research-Ekonomska Istrazivanja, 34(1), 1146–1169. https://doi.org/10.1080/1331677X.2020.1819853

Quayes, S. (2015). Outreach and performance of microfinance institutions: a panel analysis. Applied Economics, 47(18), 1909–1925. https://doi.org/10.1080/00036846.2014.1002891

Sarkar, D. (2008). Indian Microfinance Crisis. Economic and Political Weekly, 43(1), 18–20. https://doi.org/10.5334/opt.111111

Sharma, M., and Zeller, M. (1997). Repayment Performance in Group-Based Credit Programs in Bangladesh: An Empirical Analysis. World Development, 25(10), 1731–1742. https://doi.org/10.1016/S0305-750X(97)00063-6

Singh, S., Goyal, S. K., & Sharma, S. K. (2013). Technical efficiency and its determinants in microfinance institutions in India: a firm-level analysis. Journal of Innovation Economics, 11(1), 15. https://doi.org/10.3917/jie.011.0015

Tahir, I., & Tahrim, S. (2015). Efficiency and Productivity Analysis of Microfinance Institutions in Cambodia: A DEA Approach. International Review of Business Research Papers, 11(1), 25–42. https://doi.org/10.21102/irbrp.2015.03.111.03

Todd, H. (1996). Women at the Center: Grameen Bank Borrowers after One Decade. Dhaka: Dhaka University Press.

Vanroose, A., & D’Espallier, B. (2013). Do microfinance institutions accomplish their mission? Evidence from the relationship between traditional financial sector development and microfinance institutions’ outreach and performance. Applied Economics, 45(15), 1965–1982. https://doi.org/10.1080/00036846.2011.641932

Wagner, C., & Winkler, A. (2013). The Vulnerability of Microfinance to Financial Turmoil - Evidence from the Global Financial Crisis. World Development, 51, 71–90. https://doi.org/10.1016/j.worlddev.2013.05.008

White, H. (1980). A Heteroskedasticity-Consistent Covariance Matrix Estimator and a Direct Test for Heteroskedasticity. Econometrica, 48(4), 817–838. https://doi.org/10.2307/1912934

Widiarto, I., & Emrouznejad, A. (2015). Social and financial efficiency of Islamic microfinance institutions: A Data Envelopment Analysis application. Socio-Economic Planning Sciences, 50, 1-17. https://doi.org/10.1016/j.seps.2014.12.001

Wijesiri, M., Yaron, J., & Meoli, M. (2015). Performance of microfinance institutions in achieving the poverty outreach and financial sustainability: When age and size matter? Munich Personal RePEc Archive, 69821. https://doi.org/10.5897/JAERD12.088

Zainal, N. B. (2019). Impact of Firm Characteristics, Macroeconomic Conditions, Bank Regulation and Supervision on Social and Financial Efficiency of Microfinance Institutions. In Universiti Putra Malaysia (Issue 1). Universiti Putra Malaysia.

Zainal, N., Nassir, A. M., Kamarudin, F., & Law, S. H. (2020). Does bank regulation and supervision impedes the efficiency of microfinance institutions to eradicate poverty? Evidence from ASEAN-5 countries. Studies in Economics and Finance, 38(2), 272–302. https://doi.org/10.1108/SEF-10-2019-0414

Zeller, M. (1998). Determinants of Repayment Performance in Credit Groups: The Role of Program Design, Intragroup Risk Pooling, and Social Cohesion. Economic Development and Cultural Change, 46(3), 599–620. https://doi.org/10.1086/452360

Authors

Eni Murdiati
Nurazilah Zainal
nuraz3169@uitm.edu.my (Primary Contact)
Achmad Syarifudin
Zuraidah Mohd Sanusi
Zahari Md Rodzi
Author Biographies

Eni Murdiati, Da'wah and Communication, Universitas Islam Negeri Raden Fatah Palembang, South Sumatera

Eni Murdiati is currently holding a post as a lecturer at Faculty Da’wah and Communication, Universitas Islam Negeri Raden Fatah Palembang, South Sumatra, Indonesia. Her main research interest is the development of the Islamic community and effective communication.

Nurazilah Zainal, Faculty of Business and Management & Accounting Research Institute, Universiti Teknologi MARA, Negeri Sembilan Branch

Nurazilah Zainal is currently holding a post as a fellow of the Centre for Leadership Development, Universiti Teknologi MARA (UiTM). She is also a senior lecturer at the Faculty of Business and Management, UiTM.  She holds a PhD in Business Economics from Universiti Putra Malaysia. Her main research interest is firm performance (efficiency), macroeconomics, econometrics and Microfinance Institutions.

Achmad Syarifudin, Da’wah and Communication, Universitas Islam Negeri Raden Fatah Palembang

Achmad Syarifudin is currently holding a post as a lecturer at Faculty Da’wah and Communication, Universitas Islam Negeri Raden Fatah Palembang, South Sumatra, Indonesia. His main research interest is in Islamic Counseling Guidance.

Zuraidah Mohd Sanusi, Accounting Research Institute, Universiti Teknologi MARA, Shah Alam,

Prof Dr Zuraidah Mohd Sanusi is currently holding a post as a director of Centre for Leadership Development, ILD UiTM Bandar Enstek. She is also a senior research fellow at the Accounting Research Institute, Universiti Teknologi MARA (UiTM). Her main research interest is social business, auditing, forensic accounting, corporate reporting, corporate governance, management accounting and management.

Zahari Md Rodzi, Faculty of Computer Science and Mathematic, Universiti Teknologi MARA, Negeri Sembilan Branch, Seremban Campus

Zahari Md Rodzi (Ph. D UKM, Malaysia) is a Fellow at the Institute of Leadership & Development (ILD) and a Senior Lecturer at the Universiti Teknologi MARA Campus Seremban in Negeri Sembilan, Malaysia. The current research focus is on multi-criteria decision-making (MCDM)

Murdiati, E., Zainal, N., Syarifudin, A., Sanusi, Z. M., & Rodzi, Z. M. (2023). Impact of Women Borrowers Culture on the Financial Efficiency of Microfinance Institutions in ASEAN-4 Countries. Journal of Intercultural Communication, 23(2), 25–32. https://doi.org/10.36923/jicc.v23i2.96

Article Details

Funding data

  • Universiti Teknologi MARA
    Grant numbers 600-RMC/FRGS 5/3 (149/2021);: 600-TNCPI 5/3/DDN (05) (006/2020);600-TNCPI 5/3/DDN (05) (002/2021)
Smart Citations via scite_
Views
  • Abstract 171212
  • PDF 217
  • XML 0