Microcredit Governance Efficiency
Keywords:Microcredit, Financial efficiency, Social efficiency, Tobit Regression, Albanian microfinance
Albanian microfinance sector, in particular microcredit, has experienced modest development in recent years, although having the objective (moreover shared at the EU level) of the fight against social and financial exclusion, self-employment promotion, and small businesses support. Microcredit represents a lifeline or starting point for small entrepreneurs or start-ups to access credit, which is impossible otherwise. Thus, it provides a start-up or survival opportunity for people and businesses that would not have vital space in different circumstances. An instrument widely used in Western Countries, therefore, to be replicated mainly in developing countries such as Albania to allow more favorable conditions for credit access and consequently more economic and social growth. This paper aims to provide an assessment of the financial and social efficiency of the microfinance sector and, in particular, of Albanian microcredit. This evaluation is carried out using DEA (Data Envelopment Analysis) method through secondary data obtained from financial institutions operating in Albania. The analysis highlights the noticeable financial and social inefficiencies. This study clearly points out the greater attention of microcredit institutions toward financial objectives (and less to social ones).
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