Social Globalisation and Efficiency of Microfinance Institutions Nexus: Empirical Evidence on Financial and Social Efficiency

Hafezali  Iqbal Hussain; Fakarudin Kamarudin; Nazratul Aina  Mohamad Anwar; Fadzlan  Sufian; Azlan Ali; Mohd Haizam  Saudi

doi:10.5755/j01.ee.33.1.29130

Authors

Hafezali Iqbal Hussain Taylor’s Business School, Taylor’s University, Malaysia; University of Economics and Human Sciences in Warsaw, Poland
Fakarudin Kamarudin School of Business and Economics, Universiti Putra Malaysia
Nazratul Aina Mohamad Anwar Faculty of Economics and Muamalat, Universiti Sains Islam Malaysia
Fadzlan Sufian Faculty of Business and Management, Universiti Teknologi MARA, Malaysia
Azlan Ali School of Business and Management, University College of Technology Sarawak, Malaysia
Mohd Haizam Saudi Widyatama University, Indonesia

DOI:

https://doi.org/10.5755/j01.ee.33.1.29130

Keywords:

Microfinance Institutions, social globalisation, personal contacts, information flows, cultural proximity, social efficiency, financial efficiency

Abstract

The main objective of this paper is to identify the impacts of social globalisation comprised of personal contacts, information flows and cultural proximity to the financial and social efficiency of Microfinance Institutions (MFIs). This study had conducted two stages of analysis, in which the first stage is Data Envelopment Analysis (DEA) approach and the second stage is multiple panel regression analysis under Generalized Least Square estimation method. The results exhibit that the overall MFIs operated in a relatively optimal scale during the period of the study. However, these MFIs were managerially inefficient in utilising their resources to achieve both social and financial efficiency. The results from panel regression analysis showed that only personal contacts exhibit a significant positive relationship with the financial efficiency of MFIs. This study could contribute new insights and implications to various parties, such as MFIs, policy makers, investors and researchers to improve the efficiency of MFIs.

Author Biographies

Hafezali Iqbal Hussain, Taylor’s Business School, Taylor’s University, Malaysia; University of Economics and Human Sciences in Warsaw, Poland

Hafezali Iqbal Hussain, PhD, is an Associate Professor at Taylor’s Business School in Malaysia and Visiting Professor at University of Economics and Human Sciences Okopowa Warsaw, Poland. He received his PhD in Finance at the University of Hull in the UK; was formerly a chartered accountant at Citigroup; his work has appeared in several peer-reviewed finance, management, education, and scientific journals; he has presented at various conferences.

Fakarudin Kamarudin, School of Business and Economics, Universiti Putra Malaysia

Fakarudin Kamarudin, PhD (corresponding author), is a Senior Lecturer at the School of Business and Economics, Universiti Putra Malaysia (UPM). He obtained his Ph.D majoring in Finance from UPM in 2015. He has a Master of Science (MSc) in Finance in 2010 from the same university. He currently conducts lectures on Financial Management, Econometrics and Statistic.

Nazratul Aina Mohamad Anwar, Faculty of Economics and Muamalat, Universiti Sains Islam Malaysia

Nazratul Aina Mohamad Anwar, PhD, is the Senior Lecturer at the Faculty of Economics and Muamalat at the Universiti Sains Islam Malaysia (USIM). She obtained her PhD majoring in Accounting at UPM in 2016.

Fadzlan Sufian, Faculty of Business and Management, Universiti Teknologi MARA, Malaysia

Fadzlan Sufian, PhD, is a Professor at Universiti Teknologi MARA, Melaka, Alor Gajah Campus. He holds a PhD in Economics (Financial Economics) at Universiti Putra Malaysia. His articles have appeared in more than 100 local and international journals. His research concerns the measurement of the performance of banking and financial sectors.

Azlan Ali, School of Business and Management, University College of Technology Sarawak, Malaysia

Azlan Ali, PhD, is Associate Professor at University College of Technology Sarawak. Dr. Azlan Ali was appointed as Deputy Vice-Chancellor (Academic). Prior to this, he was with AmBank Berhad and was attached to Department of Corporate Banking. Dr. Azlan Ali was also chosen to be a researcher in Varna University of Economics, Bulgaria.

Mohd Haizam Saudi, Widyatama University, Indonesia

Mohd Haizam Saudi, PhD, experienced Professor graduated from Ohio University, USA and Southern Cross University, Australia. Deputy Vice Chancellor of Student Affairs & Alumni in Kolej Universiti Poly-Tech MARA, Malaysia and currently hold the position of Vice Rector of Research, Development and Cooperation at Widyatama University, Indonesia.