The Efficiency of Microfinance Institutions in Ethiopia: A DEA Approach

Abstract

In the last three decades, microfinance, as an effective tool for fighting poverty, has been gaining wider attention among policy makers, governments, international donors, and academicians across the globe. At the helm of this matter are microfinance institutions (MFIs) - institutions that have been playing a key role in reducing poverty by providing financial services to the poor. These institutions are mainly established to serve the poor - people who have little or no access to capital and formal financial services - and the role they are currently playing cannot be overemphasized. By the end of 2010, the 2,000+ MFIs around the world had reached more than 200 million low-income people (Deutsche Bank Research, 2012). However, while it is an important tool, it should still be noted that microfinance is not a panacea for poverty eradication.