Outreach and Performance Analysis of Microfinance Banks in Pakistan

Abstract

This paper investigates the outreach, performance, and a trade-off between both outreach & performance of microfinance banks in Pakistan. The sample consists of five scheduled microfinance banks and data ranging from 2008 to 2014, collected from the Mix Market international database. Using 13 ratios of outreach and 32 ratios of performance, this study used difference of mean test which compares mean values of these ratios against the South Asian benchmarks. The results indicate that the microfinance banks in Pakistan, as compared to the South Asian microfinance institutions, are facing a risky situation because of the poor performance with a low growth in the outreach. Further, results also established that there is no trade-off between outreach and performance. This study suggests that a proper corporate structure and devoted skillful management can play a vital role in making best strategies and policies to solve the problems being faced by the Pakistani microfinance banks.