Using Data Envelopment Analysis for Evaluating Efficiency of Microfinance Institutions in Vietnam
Microfinance institutions (MFIs) are very different from conventional financial institutions. They are small in size
and mainly provide small collateral free loans. The efficiency of an institution is crucial for long run sustainability. Thus
efficiency evaluation of MFIs is indispensable for monitoring and optimal policy implications in the field. Given the lack of
previous studies in this issue, the study aims to investigate the technical efficiency and scale efficiency of MFIs in Vietnam via
Data Envelopment Analysis (DEA) methods. The empirical results reveal that the average overall technical efficiency scores
of MFIs surveyed under input- and output-oriented models are both 91%. Moreover, the study suggests that the sampled MFIs
have a potential of increasing efficiency by decreasing the use of inputs while still obtaining the existing output level or
increasing the outputs without increasing the use of input level.
Index Terms - Data Envelopment Analysis, Efficiency, Microfinance Institutions, Vietnam.