The evaluation of microfinance performance in Bolivia

Abstract

Microfinance institutions (MFIs) are usually driven by a twofold orientation defined by a set of financial and social aims. To date there is no consensus on how these two orientations are connected, nor on what is the best method to evaluate performance. The introduction of social elements to measure the degree of success in recent years led to several evaluation approaches with different combinations of social and financial standards. MFIs are constrained by limited budgets to carry out performance evaluations, and they might have to choose among different assessment methodologies. This study aims to identify the preferred standard-based methods to undertake microfinance performance evaluations in Bolivia. Our findings show that microfinance institutions focus mainly on assessment and rating; the SPI4 is the most widely used method to undertake performance evaluations, followed by credit rating. Most microfinance institutions conduct social performance evaluations in collaboration with external consultants.