Responsible Financial Performance: Efficiency and Final Takeaways

This presentation discusses responsible financial performance, with a focus on MFI efficiency. It draws on data collected from 405 MFIs reporting to MIX from 73 different countries in 2009-2010. The presentation highlights the relationship between responsible financial performance and social performance. Multiple factors determine MFI costs, such as operating efficiency. MFIs need to find the right balance between financial and social performance. Enabling factors for the uptake of social performance management include socially responsible investors and an enabling regulation. The presentation makes recommendations to increase MFI efficiency, growth and profits, and offers suggestions to work towards the development of standards for good performance. It states that MFIs should:

• Consider differences in salaries and cost of living as one of the main drivers of costs;
• Consider differences in loan size, age, and scale as the main factors driving operating costs;
• Look at the market as a whole and not focus on MFI-level growth in isolation;
• Set a floor for profits, but not a ceiling;
• Look at factors that they can directly control;
• Pursue a double bottom-line approach;
• Consider the operating environment and enabling factors;
• Create the right incentives.