Microfinance Institutions Performance Measurement: Introducing a New Performance Measurement Framework

This paper presents a new performance measurement framework (PMF) for MFIs. It states that MFIs face unique challenges as they need to achieve a double bottom line of outreach and sustainability. Through a comprehensive literature review of over 150 articles, the paper assesses the performance criteria presently used by MFIs in achieving their goals. The study resulted in the creation of a PMF with a new set of key characteristics as core criteria that can help organizations identify an appropriate set of measures to assess their performance. Key lessons include:

• PMF's set of measures should provide a balanced picture of the business and also should reflect financial and non-financial measures, internal and external measures, efficient, and effective measures;
• PMF should measure results and their drivers by demonstrating how results are a function of determinants. In essence, measures can contribute both to an organization?s planning and monitoring processes;
• PMF should implement a set of performance measures that is multidimensional. This can then identify any lapse or areas of that need more attention;
• Performance measures should be integrated through the organization?s hierarchy and across its functions in order to encourage goals congruence.