Social goal of microfinance institutions in South East Asia countries: evidence for poverty reduction

Authors

  • CHE NURUL HUDA Faculty of Business and Management, University Teknology MARA, Negeri Sembilan Branch, Seremban Campus https://orcid.org/0000-0002-4951-549X
  • DR NURAZILAH ZAINAL Accounting Research Institute-HICOE & Faculty of Business and Management, Universiti Teknologi MARA, Negeri Sembilan Branch https://orcid.org/0000-0003-2973-6479
  • DR JAMILAH MOHD MAHYIDEEN Faculty of Business and Management, Universiti Teknologi MARA, Negeri Sembilan Branch

Abstract

Banking institutions have witnessed the failure of poverty reduction as a result of their provision of high-risk services to the poor. Microfinance institutions (MFIs) were created to offer low-income households with financial services. In the effort to provide continuous financial services to the poor, MFI performance is one of the most important factors to evaluate. The MFIs originated with the objective of reducing poverty as a social goal. However, the commercialization of MFIs has resulted in their financial independence, as they were formerly supported by a government. Currently, MFIs must continue to play a social role in eradicating poverty, while also striving for long-term viability. This study aims to estimate the social efficiency of MFIs in the five ASEAN countries. Data from 168 MFIs in South East Asia covering five countries from 2011 to 2017 makes up the sample. The level of social efficiency is determined using a nonparametric Data Envelopment Analysis (DEA) method. According to the study, the MFIs in the ASEAN-5 countries are less socially efficient. This suggests that the MFIs in the ASEAN-5 countries have sacrificed their initial objective of reducing poverty for a focus on establishing financial sustainability for long-term viability.

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Author Biographies

CHE NURUL HUDA, Faculty of Business and Management, University Teknology MARA, Negeri Sembilan Branch, Seremban Campus

Che Nurul Huda currently is a postgraduate student in programme Doctor of Philosophy in Business Management at Universiti Teknologi MARA, Negeri Sembilan Branch, Seremban Campus. 

DR NURAZILAH ZAINAL, Accounting Research Institute-HICOE & Faculty of Business and Management, Universiti Teknologi MARA, Negeri Sembilan Branch

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

DR JAMILAH MOHD MAHYIDEEN, Faculty of Business and Management, Universiti Teknologi MARA, Negeri Sembilan Branch

Jamilah Mohd Mahyideen is a senior lecturer at the Faculty of Business Management, Universiti Teknologi MARA Cawangan Negeri Sembilan, Malaysia. She received her PhD in Economics in 2015 from Universiti Putra Malaysia, Malaysia. Her research interest includes ASEAN studies, economic growth, infrastructure and trade.

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Published

2022-12-31

How to Cite

CHE BAHRUN, C. N. H., ZAINAL, N., & MOHD MAHYIDEEN, J. (2022). Social goal of microfinance institutions in South East Asia countries: evidence for poverty reduction. Journal of Technology Management and Technopreneurship (JTMT), 10(2), 50–59. Retrieved from https://jtmt.utem.edu.my/jtmt/article/view/6061

Issue

Vol. 10 No. 2 (2022)

Section

Journal of Technology Management and Technopreneurship

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