Analysis of microfinance institutions performance: The case of Afghanistan

This research paper assesses the financial and social performance of microfinance institutions in Afghanistan, focusing on five large microfinance institutions: First Microfinance Bank (FMFB), OXUS, Mutahid, FINCA, and The Islamic Investment and Finance Cooperatives (IIFC). The study evaluates the indicators of social performance (depth and breadth of outreach), financial performance indicators (portfolio quality, efficiency, and sustainability), as well as the impact of interest rates on the efficiency and sustainability of these institutions. Both quantitative and qualitative research method is used to analyze the data obtained from MIXmarket.org. The findings of this study suggest that the institutions need to extend their outreach since the percentage of poor clients and female borrowers is low. Even though the institutions achieved acceptable financial performance during the study period (2014-2018), their heavy dependence on loans and subsidies threatens their long-term sustainability and efficiency. As a result, the study concludes that the high-interest expense negatively impacts these institutions' efficiency and sustainability. Keywords: Microfinance Institutions, Social Performance, Financial Performance, Outreach, Sustainability, Interest Payable