Analysis of Total Factor Productivity of Microfinance Institutions in India

The paper attempts to empirically examine the productivity of microfinance institutions (MFIs) operating in India using secondary data obtained from MIX (Microfinance Information Exchange) of 52 MFIs during the period from 2016 – 2022. The study also explores the causes of growth/decline in productivity of the sample MFIs. Non-parametric approach Malmquist Productivity Index (MPI) is used to achieve the objective of the study. The findings indicate that Indian MFIs have experienced an average growth rate in total factor productivity of 8.9% during the study period. The study finds that the major cause of growth in total factor productivity is enhancement in technology used by the microfinance industry to serve the clients. The study recommends to adopt better management practices and to focus on optimum utilization of the resources in the industry.