Are Profitable Microfinance Programs Less Efficient at Reaching the Poor? A Case Study in Cambodia

We examine the relations between the financial and outreach efficiency of Cambodian microfinance institutions (MFIs). Data Envelopment Analysis (DEA) finds that commercially focused MFIs are no less efficient at reaching the poor than non-profit ones. Larger MFIs appear as efficient at reaching the poor while smaller MFIs can also be highly profitable. Overall Cambodian MFIs have become less outreach efficient while increasing their profitability. This could reflect a shift in some MFIs to improve their financial efficiency rather than serving the most clients. Our findings confirm that financial and outreach objectives are not mutually exclusive but do not always coincide