1. Performance of Microfinance Institutions in Papua New Guinea
Dr. Muneer Babu M
Senior Lecturer in Economics
IBSUniversity

2. Microfinance
Microfinance is a provision of small financial services (saving, loan, insurance and remittance) through group lending mechanism even without collateral.
This promise to solve some problems (high risk of default, few methods of enforcement of credit contract and cumbersome procedures) of traditional banking mechanism.

3. Microfinance
Access to financial services are important to ensure smoothening of income generation and consumption of people.
Performance of MFIs is crucial in the development process of the country.
As the performance of MFIs can increase access to the various financial services to a large sections of the population, who are under banked currently.

4. Motivation
There is a need of expanding the provision of financial services to the poor. Therefore, the optimal utilization of resources of microfinance institutions are important to achieve the goal.
The firm level efficiency analysis give an insight into the level of resource utilization.

5. Microfinance Institutions (MFIs) in PNG
Major PNG microfinance industry consist of Microbank and Savings and loan society (SLS) .
As on 01 October 2017, 10 PNG-MFIs report data to Mix Market,.
The data shows that PNG microfinance industry has million Kina worth of gross loan portfolio, with thousand active borrowers. Similarly, with million Kina worth of deposits.

6. Specific Objectives
To examine the level of efficiency of two types of Microfinance Institutions in PNG during and
To estimate technical efficiency ratios and scale efficiency ratios of MFIs in PNG.
To make a comparison of less efficient MFIs and highly efficient MFIs.

7. Input Profile of MFIs during 2016-17
Sl. No.
Name of MFIs
No. of Staff
Amount of Deposits
(In Million Kina) 1
Kadaporaman 27
14.16 2
Nationwide Microbank
166
69.03 3
People's Microbank
118
61.43 4
PNG Microfinance
162
59.71 5
Women's Microbank 23
3.54 6
Alenkano SLS
4.21 7
East New Britain SLS 50
30.17 8
Manus SLS 9
5.32
NCSL 67
127.17 10
Niu Ailan SLS 21
13.18
Total
670
387.92

8. Output Profile of MFIs during 2016-17
Sl. No.
Name of MFIS
No. of Active Borrowers
(In 000’)
Gross Loan Portfolio
(In Million Kina) 1
Kadaporaman
1.17
2.93 2
Nationwide Microbank
4.2
51.95 3
People's Microbank
2.32
32.28 4
PNG Microfinance
3.02
41.63 5
Women's Microbank
0.32
0.8 6
Alenkano SLS
1.33
6.45 7
East New Britain SLS
15.97 8
Manus SLS
0.78
2.12 9
NCSL
18.18
51.97 10
Niu Ailan SLS
3.54
7.13
Total
36.86
213.23

9. Review of Literature: DEA
Bassem (2008) studied 35 MFIs in Mediterranean Countries.
Finding: The size of the MFIs has negative effect on efficiency.
Haq et.al (2010) studied 39 MFIs across Africa, Asia, and the Latin America. Finding: NGO MFIs are most efficient.
Nadiya and R Ramanan (2011) examined 88 Indian MFIs for Finding: 14 MFIs are efficient.
Muneer Babu and Kulshreshtha (2013) studied 79 Indian MFIs. Finding:14 MFIs have full technical efficiency.

10. Literature Review Continue…
Muneer Babu and Kulshreshtha (2014) studied 34 Indian MFIs during to
Found that Total Factor Productivity has been marginally increased with a decline in technological growth in the microfinance industry.
Muneer Babu (2016) has studied 34 Indian MFIs during to
Found that technological progress is negatively related ted to rate of inflation and positively related to GDP growth rate.

11. Data and Methodology Mix Market: Data Set of 10 MFIs in PNG.
Data Envelopment Analysis:
Charnes, Cooper & Rhodes (CRR) Model (1978)
Bankers, Charners & Cooper (BCC) Model (1984)
Measurement of Scale Efficiency.
Software used: DEAP

14. MFIs, Exhibit CRS during 2015 and/or 2016

15. MFIs, Exhibit IRS during 2015 and/or 2016

16. MFIs, Exhibit DRS during 2015 and 2016

17. Other Findings and Conclusion
Under CRS assumption, during 2015 and 2016, the average technical efficiency of microfinance industry was 86.71% and 91.36%.
Under VRS assumption, during 2015 and 2016, the average technical efficiency of microfinance industry was 89.34% and 94.34%.
MFIs, which are in IRS still have capacity to increase scale of operation.
MFIs are in DRS could focus on exploring economies of scope by transferring excess inputs. Explore scope of decentralization, downsizing and other changes in the organizations.

18. THANK YOU