Gender Effects on Microfinance Social Efficiency: A Robust Approach Incorporating Undesirable Outputs
(2025) , 25 pages
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- Abstract
- This study investigates the impact of gender diversity at both the strategic and operational levels on the social efficiency of microfinance institutions (MFIs). Specifically, we assess how the presence of women on boards and among loan officers influences MFIs’ ability to deliver social outcomes, particularly in serving female borrowers, considering the portion of the loan portfolio that is delinquent or overdue as an undesirable output. Using a novel robust nonparametric frontier estimation method developed by Daraio and Simar (2024), we estimate both efficiency scores and their derivatives, allowing for a more nuanced evaluation of marginal effects and returns to scale. Our analysis draws on a cross-sectional dataset of 346 MFIs worldwide, incorporating directional distance functions and conditional efficiency frontiers based on external gender-related variables. The findings reveal that while the direct effect of gender composition on inputs and outputs is limited, there is a significant joint and non-linear impact of female board and loan officer representation on mitigating the negative effects of portfolio delinquency. These results underscore the importance of integrated gender diversity across strategic and field levels in enhancing the social performance of MFIs and provide actionable insights for policymakers aiming to promote inclusive financial practices.
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Citations
Daraio, C., Fall, F. S., Simar, L., & Vanhems, A. (2025). Gender Effects on Microfinance Social Efficiency: A Robust Approach Incorporating Undesirable Outputs (LIDAM Discussion Paper ISBA 2025/19).